Mortgage Servicer - NMLS Bond - Statewide in Connecticut
Table of Contents
Brief Summary
The surety bond is the simple part of a Connecticut mortgage servicer license. It is $100,000 for each office you service from, written by a surety authorized in Connecticut. What catches applicants is that the same statute also requires a fidelity bond and errors and omissions coverage sized to your servicing portfolio. Line up all three before you file on NMLS and the bonding step will not hold up your license.
Connecticut requires every licensed mortgage servicer to file a surety bond of $100,000 per office location with the Banking Commissioner under C.G.S. 36a-719c. The same section requires a separate fidelity bond and errors and omissions coverage, each starting at $300,000 and increasing with the volume of residential mortgage loans serviced.
We can help with all Connecticut bonds!
How to Apply for a Mortgage Servicer - NMLS Bond:
- Count every office you service from. The surety bond is $100,000 for each one.
- Have the legal entity name and NMLS ID exactly as shown on your NMLS company record.
- Complete the bond application and provide owner and financial information for underwriting.
- Arrange the fidelity bond and errors and omissions coverage sized to your serviced portfolio, naming the Commissioner as additional loss payee.
- Have the surety bond filed through NMLS and send the Connecticut jurisdiction specific requirements to the Department of Banking.
- Keep all three in force for the full license period.
Detailed Information About the Connecticut Mortgage Servicer - NMLS Bond:
Three instruments, not one
C.G.S. 36a-719c says no one may act as a mortgage servicer in Connecticut without maintaining a surety bond, a fidelity bond and errors and omissions coverage. The surety bond is a flat $100,000 per office location, covering the main office and each branch the company services from. It is written on a form approved by the Attorney General by a surety authorized to write bonds in Connecticut.
The fidelity bond and errors and omissions coverage are sized by the residential mortgage loans you service, as most recently reported to the Commissioner.
- $100 million or less: $300,000
- Over $100 million up to $500 million: $300,000 plus 0.15% of the amount over $100 million
- Over $500 million up to $1 billion: the above plus 0.125% of the amount over $500 million
- Over $1 billion: the above plus 0.10% of the amount over $1 billion
The deductible may not exceed the greater of $100,000 or 5% of the face amount, and the Commissioner must be named as an additional loss payee.
Who needs the license
Under C.G.S. 36a-718, anyone acting as a mortgage servicer, directly or indirectly, needs a license for the main office and each branch unless exempt. The Department of Banking has said that owners of mortgage servicing rights, including owners who hire a licensed subservicer, must obtain a license unless exempt or excluded. Exemptions include federally insured banks and credit unions and their wholly owned subsidiaries, registered exempt mortgage servicers, and Connecticut licensed correspondent lenders servicing their own loans during the 90 day holding period from a licensed office. Some exempt registrants must still keep the bond and coverage in place.
What the surety bond guarantees
The bond guarantees faithful performance of the servicer's written agreements with mortgagors and mortgagees, accurate accounting for funds received, and compliance with the servicing statutes. A mortgagor harmed by nonperformance or wrongful conversion of funds can sue on the bond, and the Commissioner can proceed on it for civil penalties, restitution and unpaid examination costs.
Cancellation
The surety must give the Commissioner at least 30 days notice before cancellation. If no reinstatement or replacement is filed by the effective date, the license is automatically suspended. The Commissioner can also require additional bonds within ten days if the licensee's financial condition calls for it.
Eligibility and Requirements for a Connecticut Mortgage Servicer - NMLS Bond:
- A surety authorized to write bonds in Connecticut, on a form approved by the Attorney General.
- Penal sum of $100,000 per office location.
- Bond running to the Banking Commissioner under C.G.S. 36a-719c.
- Separate fidelity bond and errors and omissions coverage of at least $300,000 each.
- Bond term running with the main office license period.
Connecticut Mortgage Servicer - NMLS Bond FAQs:
Not the surety bond. It is a flat $100,000 per office location. The fidelity bond and errors and omissions coverage are the instruments that scale with the loans you service.
The Department of Banking has said owners of mortgage servicing rights, including those who hire a licensed servicer, must obtain a mortgage servicer license unless exempt or excluded. Check the exemptions in C.G.S. 36a-718 before deciding you are outside the law.
Federally insured banks and credit unions, and their wholly owned subsidiaries, are exempt from the license under C.G.S. 36a-718. Exempt servicers still must follow the servicing conduct rules.
The surety prices the bond from the penal sum, the number of office locations and its review of the company's financial strength and owners' credit.
The surety must give the Commissioner at least 30 days notice. Without a reinstatement letter or new bond by the cancellation date, the license is automatically suspended.
