Surety Bond Encyclopedia

Mortgage Loan Servicer ($200,000) - NMLS Bond - Statewide in Tennessee

Brief Summary

Servicers in Tennessee do not get the sliding scale that lenders and brokers get. The bond is a flat $200,000 no matter how small the servicing book is, and it has to stay in force for two years after the license ends. Pricing it now, before the NMLS filing, keeps the bond from being the item that holds up your license.

Tennessee Code 45-13-204(b) requires every licensed mortgage loan servicer to maintain a $200,000 surety bond. It is filed with the Commissioner of Financial Institutions when the license application goes in, is payable to the State of Tennessee for the benefit of anyone injured by the licensee's wrongful act, default, fraud or misrepresentation, and must stay in place for at least 24 months after the license expires or is revoked, suspended or surrendered.

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How to Apply for a Mortgage Loan Servicer ($200,000) - NMLS Bond:

Confirm your company actually services Tennessee residential mortgage loans and is not covered by an exemption in Tennessee Code 45-13-201(b).
Have the legal entity name and NMLS ID exactly as they appear on the Tennessee servicer license application.
Authorize your surety or producer in NMLS so the Electronic Surety Bond can be attached to the filing.
Complete the bond application and the credit review for the owners or principals.
Pay the premium and confirm the $200,000 bond shows as accepted in NMLS.
Renew the license and pay the supervision fee on or before December 31 each year.

Detailed Information About the Tennessee Mortgage Loan Servicer ($200,000) - NMLS Bond:

A flat amount, not a volume tier

Tennessee's Residential Lending, Brokerage and Servicing Act sets bond amounts in Tennessee Code 45-13-204. Mortgage lenders and brokers start at $200,000 and $90,000 for their first licensing year, then carry a bond sized by the commissioner to the dollar amount of loans they originate. Servicers are handled differently. Subsection (b) says the servicer bond shall be maintained in the amount of $200,000, full stop. A servicer with a small portfolio posts the same figure as a large one.

Servicing is its own licensed activity

Section 45-13-201(a) says no person shall act as a mortgage lender, mortgage loan broker or mortgage loan servicer in Tennessee without first obtaining a license. The statute lists servicer as a separate role, so do not assume a lender or broker license already covers the servicing side of the business.

Who is exempt

Section 45-13-201(b) removes certain entities from the license requirement altogether, which also takes them out of the bond. The list includes depository institutions, subsidiaries owned and controlled by a depository institution, institutions regulated by the Farm Credit Administration, and several narrow categories such as licensed attorneys acting within federal guidelines. Read the full list before you apply.

What the bond promises

The bond runs 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 written by a bonding company qualified to do business in Tennessee. If anyone recovers on it, the licensee must immediately file a new bond.

Filing and renewal

The Tennessee Department of Financial Institutions takes mortgage company applications through NMLS and has required bonds for mortgage companies to be submitted as Electronic Surety Bonds in NMLS since June 1, 2019. Each year, on or before December 31, the licensee pays a nonrefundable supervision fee and files for renewal. Miss it and the license expires at the close of business on December 31.

Eligibility and Requirements for a Tennessee Mortgage Loan Servicer ($200,000) - NMLS Bond:

Bond amount of $200,000 under Tennessee Code 45-13-204(b).
Payable to the State of Tennessee in a form approved by the Commissioner of Financial Institutions.
Written by a bonding company qualified to do business in Tennessee.
Kept in force for at least 24 months after the license expires or is revoked, suspended or surrendered.
A new bond filed immediately after any recovery on the existing one.

Tennessee Mortgage Loan Servicer ($200,000) - NMLS Bond FAQs:

Is the servicer bond based on loan volume like the lender bond?

No. Tennessee sizes lender and broker bonds by origination volume after the first year, but Tennessee Code 45-13-204(b) fixes the servicer bond at $200,000.

Can I cancel the bond as soon as I stop servicing in Tennessee?

No. Section 45-13-204(e) requires the bond to be maintained for at least 24 months after the license expires or is revoked, suspended or surrendered. Plan for that tail when you wind down.

Who is exempt from the servicer license and bond?

Section 45-13-201(b) exempts several groups, including depository institutions, subsidiaries owned and controlled by a depository institution, and institutions regulated by the Farm Credit Administration. Check the full list in the statute against your structure.

What happens if someone collects on the bond?

Section 45-13-204(f) requires the licensee to file a new bond immediately after any recovery, so the full coverage is restored.

When does the license come up for renewal?

On or before December 31 each year. The supervision fee and renewal must be in by then or the license expires at the close of business on December 31.