Surety Bond Encyclopedia

Mortgage Broker (NMLS) Bond - Statewide in Washington

Brief Summary

A Washington mortgage broker opens with a $20,000 bond. The date that matters after that is March 31. Every year by then you must size the bond to your Washington origination volume and give DFI proof of an adequate bond. Claims against this bond pay borrowers before anyone else.

Washington mortgage brokers licensed under RCW 19.146 must keep a surety bond on file with DFI, running to the state of Washington. WAC 208-660-175 sets it by annual Washington loan origination volume at $20,000, $40,000 or $60,000. New applicants post $20,000 as an electronic bond in NMLS, and the amount is rechecked each year by March 31.

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

Have your designated broker pass the Designated Broker Test before the company applies.
Apply through NMLS and pay the $1,001 licensing fee listed by DFI.
Have the surety issue a $20,000 electronic bond in NMLS showing the corporate name and NMLS ID.
File the Q4 Mortgage Call Report by February 14 to establish annual volume.
Submit any bond rider adjusting the amount in NMLS by March 31.

Detailed Information About the Washington Mortgage Broker (NMLS) Bond:

Tiers and the March 31 check

RCW 19.146.205 requires the bond to scale with annual loan origination volume, and WAC 208-660-175 sets the scale using volume in the state of Washington:

$0 to $20 million: $20,000
$20 to $40 million: $40,000
$40 million and up: $60,000

At initial application the bond must be at least $20,000. After that, by March 31 of each year you determine the required amount and give DFI proof of an adequate bond. DFI's bond page ties this to the Q4 Mortgage Call Report due February 14. Once volume is known, your surety issues a rider in NMLS by March 31. A broker that only offers loan modification services posts $20,000.

Borrowers come first

The bond runs to the state of Washington as obligee, but first to the benefit of the borrower, then to the state and anyone else who suffers loss. Borrowers have priority. Claims by anyone other than a borrower cannot go to final judgment until 180 days after the claim is filed. The bond covers violations by you, your employees and your independent contractors.

Filing details

DFI has used the NMLS Electronic Surety Bond function since September 2016 and no longer accepts paper. The bond must show the company's corporate name and NMLS unique identifier. To change sureties, the old surety's cancellation can take effect no sooner than 30 days after DFI receives notice, and the replacement must be on file and in effect by that date.

The recovery fund is not an option you choose

WAC 208-660-176 describes a recovery fund, but it applies only if the director finds bonds are not reasonably available in the market and waives the bond requirement.

Eligibility and Requirements for a Washington Mortgage Broker (NMLS) Bond:

State of Washington as obligee, with borrowers first in line on claims.
Electronic surety bond through NMLS. Paper is not accepted.
Bond amount set by annual Washington origination volume under WAC 208-660-175.
Continuous coverage, with any replacement bond in effect before the old one cancels.
A licensed mortgage loan originator if the company originates loans.

Washington Mortgage Broker (NMLS) Bond FAQs:

What bond does a new Washington mortgage broker post?

$20,000, as an electronic surety bond through NMLS. An applicant that held a Washington license in the previous calendar year uses that year's loan volume to set the amount.

When does my bond need to go up?

Above $20 million in annual Washington origination volume the bond is $40,000, and at $40 million or more it is $60,000. By March 31 each year you determine the right amount and give DFI proof.

Who gets paid first if there is a claim?

The borrower. RCW 19.146.205 makes the bond run first to the borrower, then to the state and other injured persons from what remains.

Can we use a recovery fund instead of a bond?

No. The recovery fund in WAC 208-660-176 comes into play only if the director determines bonds are not reasonably available and waives the requirement.

Can I switch surety companies mid-year?

Yes. The old surety's cancellation takes effect no less than 30 days after DFI receives it, and your replacement bond must be on file and in effect by that cancellation date.

Who is exempt from the broker license?

WAC 208-660-008 lists exemptions including federally insured depository institutions, authorized insurance companies, Washington attorneys acting incidentally to legal work, and real estate licensees who receive only the customary commission.