Surety Bond Encyclopedia

Mortgage Lender (NMLS) Bond - Statewide in Virginia

Brief Summary

Licensed Virginia mortgage lenders never bond below $50,000, even in a first year with no closings. The bond is only half of the money question, too. The same rule requires $200,000 in available funds, and the bond does not count toward it. Line both up before the application goes in.

A Virginia mortgage lender files a surety bond with the Commissioner of Financial Institutions under Va. Code 6.2-1604. 10VAC5-160-15 sets the lender minimum at $50,000 and adjusts it each year from residential mortgage loans originated in the preceding calendar year, reaching $150,000 above $100,000,000 in originations. Lenders must separately keep at least $200,000 in available funds.

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How to Apply for a Mortgage Lender (NMLS) Bond:

Confirm you are not exempt. Three or fewer mortgage loans in any 12 consecutive months falls outside Chapter 16.
Document $200,000 in available funds through bank deposits or bank lines of credit.
Set the bond at $50,000 or the higher tier your prior calendar year originations require.
Pay the $500 lender application fee, or $1,000 for combined lender and broker authority, plus $150 per office.
File the executed bond with the Commissioner with the application.
Recheck the tier each year and raise the bond when volume crosses a threshold.

Detailed Information About the Virginia Mortgage Lender (NMLS) Bond:

Two separate money tests

10VAC5-160-15 does two things. Subsection A sets the bond. Subsection C requires a mortgage lender to keep at least $200,000 in funds available for the operation of its business, shown through bank deposits, established lines of credit, or both. Letters of credit and lines of credit from anyone other than a bank or other depository institution do not satisfy it. The surety bond is not part of that $200,000.

Bond tiers for a lender

The minimum for a mortgage lender, or for a company with dual lender and broker authority, is $50,000. Each year the amount is adjusted to this scale, based on residential mortgage loans originated in the preceding calendar year:

$0 to $5,000,000: $25,000
$5,000,001 to $20,000,000: $50,000
$20,000,001 to $50,000,000: $75,000
$50,000,001 to $100,000,000: $100,000
Over $100,000,000: $150,000

Because of the $50,000 floor, the bottom row never applies to a lender.

Conditions and claims

Va. Code 6.2-1604 requires a corporate surety authorized in Virginia, on a form approved by the Commission. The bond guarantees that the lender performs its written agreements with borrowers, accounts correctly for all funds received, and runs the business in line with Chapter 16 and all applicable law. Any damaged person may proceed against the lender, the surety, or both, with total liability capped at the penal sum.

Who is exempt

Va. Code 6.2-1602 exempts lenders making three or fewer mortgage loans in any 12 consecutive months, banks, savings institutions and credit unions, insurance companies, government agencies, and several other categories listed in the statute.

Eligibility and Requirements for a Virginia Mortgage Lender (NMLS) Bond:

Corporate surety authorized in Virginia, on a Commission approved bond form.
Minimum $50,000 bond for a lender or dual authority licensee.
Separate $200,000 available funds requirement under 10VAC5-160-15 C.
Bond continuously maintained, and retained by the Commissioner after surrender or revocation.
Owner credit and company financial statements for surety underwriting.

Virginia Mortgage Lender (NMLS) Bond FAQs:

We are brand new with no loan volume. Can we post the $25,000 bond?

No. $25,000 is the broker floor. A mortgage lender, or a company licensed as both lender and broker, starts at $50,000 under 10VAC5-160-15 regardless of volume.

Does the bond count toward the $200,000 funds requirement?

No. The $200,000 must be available through bank deposits, established lines of credit from a bank or other depository institution, or a combination. The bond is a separate filing.

When does the bond go up?

The amount is adjusted annually from residential mortgage loans originated in the preceding calendar year. Above $20,000,000 it is $75,000, above $50,000,000 it is $100,000, and above $100,000,000 it is $150,000.

We only make a couple of private mortgage loans a year. Do we need a license and bond?

Va. Code 6.2-1602 exempts lenders making three or fewer mortgage loans in any period of 12 consecutive months. Once you make more than three in that window, the exemption no longer applies.

How is the premium set?

The surety looks at owner credit, company financial statements and experience, then quotes an annual premium on the bond amount for your tier.