Surety Bond Encyclopedia

Mortgage Broker Bond - Statewide in Arizona

Brief Summary

The Arizona mortgage broker bond is small and fixed by statute. A single private investor in your book puts you at $15,000. Only when every investor is an institution does it drop to $10,000. We issue it with an Arizona authorized surety so it can sit with the deputy director before your first loan is negotiated.

A.R.S. 6-903 requires every licensed Arizona mortgage broker to deposit a surety bond with the deputy director of the Financial Institutions Division, Department of Insurance and Financial Institutions, before doing business. The bond is $10,000 if the broker's investors are limited solely to institutional investors and $15,000 if any investor is noninstitutional. It protects anyone hurt by the broker's wrongful act, default, fraud or misrepresentation.

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How to Apply for a Mortgage Broker Bond:

Check every investor against the institutional investor list in A.R.S. 6-903(L) to pick $10,000 or $15,000.
Register the entity to do business in Arizona if it is not a natural person.
Name the responsible individual who will be designated on the license.
Sign the bond as principal with a surety authorized in Arizona.
Deposit the bond with the deputy director before doing business.
Pay the $500 application fee, then the annual renewal fee for your loan count.

Detailed Information About the Arizona Mortgage Broker Bond:

Loan volume does not change the bond

A common belief is that the bond grows with production. It does not. A.R.S. 6-903(K) sets two amounts only: $10,000 when investors are limited solely to institutional investors and $15,000 when any investor is noninstitutional. Volume matters to the renewal fee, not the bond.

Who needs the license

Arizona defines a mortgage broker as a person, not exempt under A.R.S. 6-902, who for compensation or the expectation of it makes, negotiates or offers to make or negotiate a mortgage loan. A person may not act as a mortgage broker without a license under the article. An entity that is not a natural person must be registered to do business in Arizona on the date the license is granted and must designate an officer, director, member, partner, employee or trustee as the individual responsible for it.

Exemptions under A.R.S. 6-902 include banks, credit unions and insurance companies regulated under other law, attorneys not principally engaged in negotiating mortgage loans, people lending their own money for their own investment without intent to resell, sellers taking back a mortgage or deed of trust on property they sold, and government agencies.

Bond terms

The broker signs as principal with a surety company authorized to do business in Arizona. The bond is conditioned on faithful compliance with the article by the licensee and its directors, officers, members, partners, trustees and employees. It is payable to any person injured by the licensee's wrongful act, default, fraud or misrepresentation and to the state for that person's benefit.

Cash or FDIC or NCUA insured certificates and share accounts may be deposited in place of the bond. That money is released only on the deputy director's written authorization or a court order, and not before three years after the bond is substituted or the license ends.

Fees and renewal

A.R.S. 6-126 sets the application fee at $500. Annual renewal is $250 for fifty loans or fewer in the preceding calendar year, $500 above that, plus $200 per branch office. Before renewing, the applicant or designated responsible individual must complete twelve continuing education units from a provider approved by the deputy director.

Eligibility and Requirements for a Arizona Mortgage Broker Bond:

Bond of $15,000 if any investor is noninstitutional, $10,000 if all are institutional.
Surety company authorized to do business in Arizona.
Bond payable to injured persons and to the State of Arizona for their benefit.
A designated responsible individual for any applicant that is not a natural person.
Twelve continuing education units completed before each renewal.

Arizona Mortgage Broker Bond FAQs:

Will my bond go up as I close more loans?

No. The bond stays at $10,000 or $15,000 depending on your investors. Closing more than fifty loans in a year raises the renewal fee from $250 to $500, but the bond does not change.

When do I need the $15,000 bond instead of $10,000?

Whenever your investors include anyone outside the institutional list, such as a private individual. Banks, credit unions, savings and loan associations, insurance companies, pension trusts and licensed real estate brokers are among the institutions on that list.

Do I need the bond before I am licensed or after?

A.R.S. 6-903 requires the bond to be deposited with the deputy director before you do business as a mortgage broker.

Can I deposit cash instead?

Yes. Cash or FDIC or NCUA insured certificates in the same amount are accepted. The state treasurer may charge up to $10 per deposit, and release waits at least three years after the license ends.

I am an attorney who occasionally arranges a loan. Do I need this license?

A.R.S. 6-902 exempts attorneys licensed in Arizona who are not actively and principally engaged in the business of negotiating mortgage loans.