Surety Bond Encyclopedia

Mortgage Loan Originator Bond - Statewide in Virginia

Brief Summary

The first question on a Virginia loan originator bond is whose name goes on it. If you work for a licensed or exempt mortgage company, that company files one bond covering its originators. If you do not, you file your own individual bond, starting at $25,000.

Va. Code 6.2-1703 requires a surety bond with every mortgage loan originator license application, filed with the State Corporation Commission. Originators who are employees or exclusive agents of a company licensed or exempt under Chapter 16 are covered by a bond that company files. Everyone else posts an individual bond. The base amount is $25,000, and the Commission may require more based on the prior calendar year's residential mortgage originations.

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How to Apply for a Mortgage Loan Originator Bond:

Decide which bond applies: your employer's blanket bond, or an individual bond if you are not tied to a Chapter 16 company.
Apply on the form provided by the Registry (NMLS).
Pay the application fee, not to exceed $150, plus Registry, testing, education, fingerprint and credit report charges.
Complete pre-licensing education and testing (Va. Code 6.2-1708 and 6.2-1709).
Have the executed bond filed with the Commission with the application.
Pay the annual fee, $100 unless the Commission sets another amount, by the end of each license year.

Detailed Information About the Virginia Mortgage Loan Originator Bond:

Individual bond or company bond

Va. Code 6.2-1703 A splits originators into two groups. If you are not an employee or exclusive agent of a person licensed or exempt from licensing under Chapter 16, the bond is an individual surety bond for you. If you are an employee or exclusive agent of such a company, the bond is filed by the company and covers all of its employees and exclusive agents who hold or are applying for an originator license.

Amount

The bond is $25,000 or a greater sum the Commission requires based on the total dollar amount of residential mortgage loans originated in the preceding calendar year. For an individual bond, that volume is the applicant's own. For a company bond, it is the company's. A bond the company already has on file under Va. Code 6.2-1604 may be applied toward this minimum, subject to Commission approval.

What it covers

The bond guarantees that the originator performs all written agreements with borrowers and prospective borrowers, correctly accounts for all funds received, and acts in line with Chapter 17. Any person damaged by a breach can proceed against the principal, the surety, or both. Liability is capped at the penal sum, and the bond must be kept continuously in force. It must come from a corporate surety authorized in Virginia, on a form approved by the Commission.

Who does not need a license

Va. Code 6.2-1701 lists exemptions, including registered mortgage loan originators, loan processors and underwriters in most cases, purely clerical staff, real estate brokers not paid by a lender, and attorneys whose work counts as the practice of law.

Eligibility and Requirements for a Virginia Mortgage Loan Originator Bond:

Corporate surety authorized in Virginia, on a Commission approved form.
Base bond of $25,000, raised if the Commission requires more for prior year volume.
Individual bond for unaffiliated originators. Company bond for employees and exclusive agents.
Bond continuously maintained while licensed.
Annual license renewal under Va. Code 6.2-1701.

Virginia Mortgage Loan Originator Bond FAQs:

I work for a licensed mortgage lender. Do I buy my own bond?

No. Under Va. Code 6.2-1703 A, if you are an employee or exclusive agent of a company licensed or exempt under Chapter 16, the company files a bond covering all of its employees and exclusive agents holding or applying for an originator license.

When do I need an individual bond?

When you are not an employee or exclusive agent of a company licensed or exempt from licensing under Chapter 16. The bond is then an individual surety bond in your name.

How much is the bond?

$25,000, or a greater sum the Commission requires based on residential mortgage loans originated in the preceding calendar year. Confirm the required figure with the Bureau of Financial Institutions before the bond is issued.

Can my employer's lender bond do double duty?

Possibly. A bond already on file under Va. Code 6.2-1604 may be applied toward the originator bond minimum, but only with Commission approval.

I am a registered mortgage loan originator. Do I need this?

Registered mortgage loan originators are exempt from Virginia originator licensing under Va. Code 6.2-1701, and the bond in Va. Code 6.2-1703 accompanies a license application.