Surety Bond Encyclopedia

Mortgage Lender - NMLS Bond - Statewide in Tennessee

Brief Summary

A Tennessee mortgage lender bond is not one number. New licensees carry a fixed $200,000, and later renewals reset it to $100,000, $200,000 or $300,000 depending on the Tennessee residential loans you closed in the prior calendar year. We match the bond to your bracket so a lender with $8 million of Tennessee closings is not carrying a $300,000 bond, and a lender at $60 million is not caught short.

Tenn. Code Ann. 45-13-204 requires every licensed mortgage lender to file a surety bond payable to the State of Tennessee. Lenders post $200,000 in their early years of licensing. After that, Rule 0180-17-.08 sets the lender bond by the dollar amount of Tennessee residential mortgage loans originated in the preceding calendar year: $100,000 under $10 million, $200,000 from $10 million to under $50 million, and $300,000 at $50 million or more. Applications and renewals are filed through NMLS.

We can help with all Tennessee bonds!

How to Apply for a Mortgage Lender - NMLS Bond:

Total the Tennessee residential mortgage loans your company originated in the preceding calendar year.
Check whether you are still in the fixed $200,000 period, then match the volume to the $100,000, $200,000 or $300,000 tier.
Have the legal entity name and NMLS ID exactly as shown on the Tennessee license record.
Provide financial statements and owner details for the surety's underwriting review.
Approve the quote and receive the bond payable to the State of Tennessee.
File the bond through NMLS and adjust it at renewal when your volume changes tiers.

Detailed Information About the Tennessee Mortgage Lender - NMLS Bond:

Find your tier

The statute says a lender's bond must reflect the dollar amount of loans originated, as determined by the commissioner. Rule 0180-17-.08, as the Department of Financial Institutions explained in Bulletin C-10-1, turns that into three lender tiers based on Tennessee residential mortgage loans the licensee originated in the preceding calendar year:

Less than $10,000,000: $100,000
$10,000,000 to less than $50,000,000: $200,000
$50,000,000 or more: $300,000

The fixed $200,000 years

New lenders do not use the tiers right away. For a lender filing a renewal application in the calendar year its license was issued, or in the calendar year right after the year of issuance, the rule requires a fixed $200,000 bond. A lender with little volume should not expect to drop to $100,000 until the following renewal.

Only Tennessee residential loans count toward the tier. Volume closed in other states does not move the number.

What the bond answers for

The bond is payable to the State of Tennessee, in a form approved by the commissioner, for the benefit of any person injured by the licensee's wrongful act, default, fraud or misrepresentation. It must be issued by a bonding company qualified to do business in Tennessee. If anyone recovers on the bond, the licensee must immediately file a new one. The bond stays in force for at least 24 months after the license expires, is revoked, suspended or surrendered.

Other license requirements

Section 45-13-203 requires tangible net worth of at least $25,000, plus $25,000 more for each additional branch office. Licensees pay a nonrefundable supervision fee and submit a renewal application on or before December 31 each year, or the license expires at the close of business that day. TDFI takes all mortgage applications through NMLS.

Section 45-13-201 exempts depository institutions and their federally regulated subsidiaries, Farm Credit institutions, attorneys meeting the federal guidelines, sellers making five or fewer residential loans in 12 months, employers lending to employees, and a few other narrow categories.

Eligibility and Requirements for a Tennessee Mortgage Lender - NMLS Bond:

$200,000 fixed bond in the early licensing years, then $100,000, $200,000 or $300,000 by prior year Tennessee volume.
Payable to the State of Tennessee on a form approved by the commissioner.
Issued by a bonding company qualified to do business in Tennessee.
Tangible net worth of at least $25,000, plus $25,000 for each additional branch office.
Bond maintained for at least 24 months after the license ends.

Tennessee Mortgage Lender - NMLS Bond FAQs:

We closed $12 million of Tennessee residential loans last year. Which bond do we need?

$200,000. Under Rule 0180-17-.08, volume of $10 million to less than $50 million puts a lender in the $200,000 tier. Below $10 million the bond is $100,000, and at $50 million or more it is $300,000.

We were licensed this year. Can we drop to $100,000 at renewal?

Not yet. A lender renewing in the calendar year its license was issued, or in the year after that, keeps the fixed $200,000 bond. The volume tiers apply at renewals after that.

Do loans we close in other states count?

No. The rule measures Tennessee residential mortgage loans the licensee originated in the preceding calendar year. A large multistate lender with a small Tennessee book can sit in the $100,000 tier.

How long does the bond stay in force if we give up the license?

At least 24 months after the license expires or is revoked, suspended or surrendered. Consumers harmed before the license ended can still recover on it during that period.

Is a bank or credit union required to hold this license?

No. Section 45-13-201 exempts depository institutions and their subsidiaries regulated by a federal banking agency. Individual loan originators still need their own licenses under the SAFE Act.