Mortgage Banker Bond - Statewide in Arizona

Brief Summary

Arizona does not size the mortgage banker bond on loans originated. It uses your total assets plus the unpaid balance of loans you service for others, measured at fiscal year end, and the result runs from $25,000 to $100,000. Run that number first and we will match the bond to it, written by a surety authorized in Arizona and ready to deposit with the deputy director.

A.R.S. 6-943 requires every licensed Arizona mortgage banker to deposit a surety bond with the deputy director of the Financial Institutions Division before doing business. The bond is computed on total assets plus the unpaid balance of loans serviced for others as of fiscal year end, starting at $25,000 and capping at $100,000. A licensee whose investors are limited solely to institutional investors posts $25,000.

We can help with all Arizona bonds!

How to Apply for a Mortgage Banker Bond:

• Total your assets plus the unpaid balance of loans serviced for others at fiscal year end.
• Apply the A.R.S. 6-943 table to that base, or use $25,000 if all investors are institutional.
• Provide entity financials and owner details for the surety's review.
• Sign the bond as principal with a surety authorized in Arizona.
• Deposit the bond with the deputy director before doing business.
• Recompute the base each fiscal year and increase the bond if the table calls for it.

Detailed Information About the Arizona Mortgage Banker Bond:

The base is assets plus servicing, not originations

The bond is computed on a base consisting of the licensee's total assets plus the unpaid balance of loans it has contracted to service for others, as of the end of its fiscal year. Coverage must be kept at the amount that base produces.

• Base not over $1,000,000: $25,000 for the first $500,000, plus $5,000 for each $100,000 or fraction of it over $500,000
• $1,000,001 to $10,000,000: $50,000, plus $5,000 for each $1,800,000 or fraction of it over $1,000,000
• $10,000,001 to $100,000,000: $75,000, plus $5,000 for each $18,000,000 or fraction of it over $10,000,000
• $100,000,001 and over: $100,000

Worked from the table, a base of $750,000 produces a $40,000 bond and a base of $5,500,000 produces $65,000. The fraction rule rounds every partial step up, so small growth can push you into the next $5,000.

The institutional exception

A.R.S. 6-943(I) sets the bond at a flat $25,000 for licensees whose investors are limited solely to institutional investors, whatever the base.

What the bond covers

The licensee signs as principal with a surety company authorized to do business in Arizona. The bond is conditioned on faithful compliance by the licensee and its directors, officers, members, partners, trustees and employees, and is payable to anyone injured by the licensee's wrongful act, default, fraud or misrepresentation and to the state for that person's benefit. Cash, or certificates of deposit and share accounts insured by the FDIC or NCUA and payable or assigned to the state treasurer, may be deposited instead.

The bond is not the only financial test

A mortgage banker must also maintain a net worth of not less than $100,000 at all times. Renewal requires twelve continuing education units from a provider approved by the deputy director. Under A.R.S. 6-126 the application fee is $1,000 and annual renewal is $750 for one hundred loans or fewer in the preceding calendar year, $1,250 above that, plus $250 per branch office.

Eligibility and Requirements for a Arizona Mortgage Banker Bond:

• Bond between $25,000 and $100,000 under the A.R.S. 6-943 table.
• Flat $25,000 bond where investors are limited solely to institutional investors.
• Net worth of not less than $100,000 at all times.
• Surety company authorized to do business in Arizona.
• Twelve continuing education units before each renewal application.

Arizona Mortgage Banker Bond FAQs:

Official and Additional Resources for the Arizona Mortgage Banker Bond: