Surety Bond Encyclopedia

Mortgage Originator Bond - Statewide in Pennsylvania

Brief Summary

If your sponsor is a licensed Pennsylvania mortgage lender, its company bond already covers you. This individual bond is for originators who work under a bank, credit union or other excepted employer that has chosen not to carry that coverage itself. The tier follows your own Pennsylvania loan volume, so an originator expecting less than $7,500,000 in a year starts at the $25,000 bond and moves up only as production grows.

Pennsylvania requires an individual surety bond from a licensed mortgage originator only when the originator works for, or under the direct supervision and control of, a person excepted from the Mortgage Licensing Act that does not elect to maintain bond coverage for its originators the way a mortgage lender does. Under 7 Pa.C.S. § 6131(f)(4) the amount runs from $25,000 to $150,000 based on the originator's annual Pennsylvania loan volume, and the bond must be in place before the license is issued.

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How to Apply for a Mortgage Originator Bond:

Ask your sponsoring employer whether it maintains bond coverage for its originators under 7 Pa.C.S. § 6112. If it does, you do not post this bond.
Estimate your Pennsylvania originations for the first calendar year of licensing to choose the correct tier.
Complete 20 hours of prelicensing education and pass the national test component through an NMLS approved provider.
Authorize the credit report and the Pennsylvania State Police and FBI background checks in NMLS.
Obtain the bond from a surety company authorized to do business in Pennsylvania, in a form acceptable to the Department of Banking and Securities.
Have the bond in force before the license is issued and keep it in force while licensed.

Detailed Information About the Pennsylvania Mortgage Originator Bond:

Who actually posts this bond

Most Pennsylvania mortgage originators never buy this bond. A licensed mortgage lender carries a company bond under 7 Pa.C.S. § 6131(c)(5) that provides coverage for the originators it sponsors. The individual bond in § 6131(f)(4) applies to an originator employed by, or under the direct supervision and control of, a person excepted from the Mortgage Licensing Act or excepted from licensure under § 6112, and only when that employer does not elect to maintain bond coverage for its originators in the same manner as a mortgage lender.

Banks and credit unions are the clearest example. Under § 6112(1) a banking institution or credit union that registers with the Department of Banking and Securities either carries the coverage itself or shows the department each year that every one of its originators holds the individual bond described here.

The five tiers

The amount is set by the originator's own volume of mortgage loans secured by Pennsylvania dwellings or residential real estate in a calendar year.

Less than $7,500,000: $25,000
$7,500,000 to $14,999,999.99: $50,000
$15,000,000 to $29,999,999.99: $75,000
$30,000,000 to $49,999,999.99: $100,000
$50,000,000 or more: $150,000

How the tier is set and reset

A new applicant picks the tier from anticipated originations in the first calendar year of licensing. After that the department determines the amount each year from the volume shown on the originator's periodic report, so a strong year can move the bond into the next tier.

Who the bond protects

The bond runs to the Commonwealth and is for the use of the Commonwealth and any consumer injured by the originator's acts or omissions related to the regulated mortgage loan business. It must come from a surety company authorized to do business in Pennsylvania and be in a form acceptable to the department. It cannot be canceled unless the department gets notice of intention to cancel at least 30 days before cancellation takes effect, and cancellation does not invalidate the bond for the period it was in effect.

Costs that come with the license

The NMLS new application checklist lists a $200 Pennsylvania license fee, a $30 NMLS initial processing fee, a $15 credit report, $22.00 for the Pennsylvania State Police background check and $36.25 for the FBI background check. Applicants also complete 20 hours of prelicensing education and pass the national test component. None of those steps replaces the bond when it applies.

Eligibility and Requirements for a Pennsylvania Mortgage Originator Bond:

Bond amount matching your volume tier: $25,000, $50,000, $75,000, $100,000 or $150,000.
Bond running to the Commonwealth of Pennsylvania for its use and the use of injured consumers.
A clause barring cancellation unless the department receives at least 30 days' notice.
A valid NMLS unique identifier.
Employment by, or direct supervision and control of, a single sponsoring entity.

Pennsylvania Mortgage Originator Bond FAQs:

My company is a licensed mortgage lender. Do I need my own bond?

No. A licensed mortgage lender's bond under 7 Pa.C.S. § 6131(c)(5) provides coverage for the originators it sponsors. The individual bond applies when your employer is an excepted person, such as a bank or credit union, that has not elected to carry that coverage itself.

I work for a bank. How do I know whether I need it?

Ask the bank which option it chose under § 6112(1). It either maintains bond coverage for its originators the way a mortgage lender does, or it demonstrates to the department each year that all of its originators hold individual bonds. In the second case you post this bond.

Which tier do I buy as a new licensee?

The tier matching the Pennsylvania loan volume you expect to originate in your first calendar year of licensing. Less than $7,500,000 is the $25,000 tier. After the first year the department resets the amount from your periodic report.

Who can make a claim on the bond?

The Commonwealth, and any consumer injured by your acts or omissions related to the mortgage loan business regulated by the Mortgage Licensing Act.

Can the surety cancel the bond without warning?

No. The bond must state that it cannot be canceled for any cause unless notice of intention to cancel is given to the department at least 30 days before cancellation takes effect. Cancellation does not invalidate the bond for the time it was in effect.