Fidelity Bond for Loan Closing Attorneys Bond - USDA in All States
Table of Contents
Brief Summary
An attorney who closes an USDA real estate loan on an attorney's title opinion has to show fidelity coverage before the agency will approve them as closing agent. This bond is that coverage, sized to the loans you close, so the file can move without waiting on a title insurer's closing protection letter.
Under 7 CFR 1927.54, a closing agent for USDA real estate loans must be covered by a fidelity bond protecting the agency unless a closing protection letter is provided. When an attorney closes on an attorney's title opinion, fidelity coverage is required for the attorney and every employee with access to the funds, and required coverage must at least equal the amount of the loan being closed.
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How to Apply for a Fidelity Bond for Loan Closing Attorneys Bond:
- Confirm the closing is on an attorney's title opinion and not covered by a closing protection letter.
- Get the loan amount and any coverage level the USDA State Office requires.
- Apply for a fidelity bond covering you and every employee with access to loan funds.
- Submit the agency certification form with the bond and professional liability coverage.
- Keep coverage at or above the size of the loans you close.
Detailed Information About the All States Fidelity Bond for Loan Closing Attorneys Bond:
Many closing attorneys do not need this bond
The first question is how title is being certified. 7 CFR 1927.54 tells USDA State Offices to require title insurance on loan closings unless it is unavailable or not economically feasible. When a title policy is used and the attorney is approved by the title insurer and covered by its closing protection letter, the attorney does not need professional liability insurance or a fidelity bond. The bond is for attorneys who close on their own title opinion, or who otherwise are not covered by a closing protection letter.
What the regulation requires
Section 1927.54(b) makes the closing agent responsible for disbursing agency loan funds and the borrower's funds so the agency gets the title and lien position it requires. The closing agent must be covered by a fidelity bond that protects the agency, unless a closing protection letter is provided. Under 1927.54(c), an attorney providing title clearance by opinion must certify professional liability coverage on an agency form, and if the attorney is also the closing agent, fidelity coverage must cover the attorney and any employee with access to the funds.
How much coverage
The agency decides the appropriate level. The regulation sets a floor: required insurance must, at minimum, cover the amount of the loan to be closed. The agency also approves the form stating the bond coverage. A practice closing larger loans will need a larger bond.
Other conditions
The attorney must be licensed in the state where the property is located. Anyone debarred or suspended from federal programs cannot take part, and a closing agent with a financial interest in the property cannot handle the closing. Confirm the current certification form and required coverage with the USDA State Office handling the loan before the bond is issued.
Eligibility and Requirements for an All States Fidelity Bond for Loan Closing Attorneys Bond:
- Law license in the state where the real estate security is located.
- Fidelity coverage protecting the agency, at least equal to the loan amount.
- Coverage for the attorney and all employees with access to funds.
- Professional liability insurance when giving the title opinion.
- No current federal debarment or suspension and no financial interest in the property.
All States Fidelity Bond for Loan Closing Attorneys Bond FAQs:
Not if you are approved by the title insurer and covered by its closing protection letter. 7 CFR 1927.54(c) waives the fidelity bond and professional liability insurance in that case.
USDA sets the level, but required coverage must at least cover the amount of the loan being closed.
It has to. The regulation requires fidelity coverage for the attorney and any employee who has access to the loan funds.
The agency. The bond protects USDA against loss if loan funds are misapplied during closing.
The surety looks at the coverage amount, the number of people covered, your trust account controls and your credit.
