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Mortgage Servicer Bond

In states across the country, the law says you must obtain a mortgage servicer surety bond before you're allowed to obtain a license to work as a mortgage servicer. If you plan to pursue this line of work, you need to understand how the surety bonding requirements work and how they affect you. This is your guide to the mortgage servicer bond.

What is a Mortgage Servicer Bond?

It's a way to hold a mortgage servicer financially accountable if they break state laws or codes of conduct applicable to servicing mortgages. States require these types of bonds as a way to regulate the mortgage industry. In the absence of a bond requirement, people who have fallen victim to unscrupulous mortgage servicing professionals would not have an easy or reliable way to seek justice.

How does a Mortgage Servicer Bond work?

If someone believes they have been exploited or otherwise taken advantage of by a mortgage servicer, they may file a claim against the mortgage servicer bond. The surety company that issues and backs the bond then launches an investigation and, provided that the claim holds up, the surety automatically settles it in full. Following payment, the surety will use any legal means to collect the amount of the settlement from the mortgage servicer - the party who is financially responsible for all claims.

Who should get a Mortgage Servicer Surety Bond?

Some but not all states require a mortgage servicer bond before granting a professional license in this field. If you're unsure whether you require a bond in your state, or have other questions about how bonding affects your mortgage business, reach out to Viking Bond Service for free information.

Who are the parties involved in a Mortgage Servicer Bond?

There are three:

• Principal - The mortgage service who pays to obtain the surety bond and pays (eventually) for all claims.
• Obligee - The party who stands to take a loss if the mortgage servicer acts in an unscrupulous manner. The obligee has the right to file claims against the surety bond seeking damages.
• Surety - The company that issues the bond and guarantees payment. When the surety pays to settle a claim, the principal must pay the surety back with interest and fees included in the debt.

How much does a Mortgage Servicer Bond cost?

That depends on the value of the surety bond (the total amount the surety is willing to pay). Each state that requires a mortgage servicer surety bond has different requirements for how large they must be. The cost is a small fraction of that amount. Surety companies charge different rates for the same bond based on the applicant's credit, background, and financial history. People with bad credit will pay slightly more. However, with the help of an understanding surety agency like Viking Bond Service, they won't be denied the bond they need to get a license and start a business.

How to apply for a Mortgage Servicer Bond?

Applying is easy. Simply submit a standard bond application, submit to a credit check, and turn over any additional documentation the underwriters at the surety ask for. Based on your application, you will receive a quote for the bond price (known as the premium). After you pay the premium, you receive a document to prove you have a bond to give the state agency that requires it.

Viking Bond Service - A Better Way to Get Bonded

Establishing yourself as a mortgage servicer can't happen until you have a bond. So why wait? Take just a few minutes to complete our online application at your own convenience. You can also call us at 1-888-278-7389 or reach us through the contact form on this page.