Passed on March 26, 2019, House Bill 1440 affects the required surety bond amount for Indiana loan brokers prior to receiving or renewing a license. Previously, the amount of the surety bond had to be between $50,000 and $75,000 and was based on loan volume for the previous year. However, the new legislation sets the initial bond amount at $60,000. The surety bond itself needs to be kept on file electronically and it must cover all loan originators employed by the broker, as well as its principal managers. Because loan brokers are tasked with handling large amounts of money, the Indiana Secretary of State requires that these business entities have a surety bond to protect consumers against any potential wrongdoing on the part of the broker. This legislation goes into effect on July 1, 2019.
How much does an Indiana loan broker surety bond cost?
The cost of this type of surety bond varies because it is subject to underwriting. Underwriting means that the surety company will evaluate the financial health of the broker by looking at their credit score and past financial ventures. Typically, a highly qualified broker is approved for roughly 1% of the surety bond amount, meaning that for a $60,000 bond, the premium will be around $600 for a full year of coverage. These surety bonds are valid for one-year terms and will need to be renewed for as long as the broker wishes to remain licensed.
What does the new law mean for currently bonded loan brokers?
Due to the bond amount changing, some loan brokers may see a change in premium owed at renewal, depending on the amount of their previous bond. For example, a loan broker who was previously subject to a $75,000 will most likely pay less for a $60,000 bond, barring any significant changes to their credit. However, as is true for all bond renewals, an applicant who has significantly improved or worsened their credit during the term of their previous bond will most likely see a significant change to their rate at the time of renewal.
How to get a loan broker license in Indiana
To get a loan broker license in Indiana, all applicants are subject to the following requirements as established by state law:
- Complete an FBI background check to ensure the loan broker and its employees have not committed a felony or been arrested for fraud
- Provide evidence of a surety bond in the amount of $60,000
- If applying as an individual, provide proof of completion of all education requirements outlined by the state of Indiana
- Provide the name and license number of all mortgage loan originators employed by the broker, the location of each loan broker office, and the name of the branch manager
- Provide the name, address, telephone number, date of birth, and Social Security number for all owners of the company
- Pay $200 application fee
Indiana loan brokers must also file a “loan processing company notice filing” with the Nationwide Multistate Licensing System (NMLS) before going into business. For the company notice filing, the broker must outline the name of the organization, its address, and the state(s) in which it will operate. Brokers must also provide the names of the owners, officers, members, or partners who control the loan processing company, the name of each person who is employed by the company, and the license number of any employee required to have a license. This information and a $25 application fee will be submitted to the NMLS.
Ready to apply for your Indiana loan broker bond?
Whether you need to update your current bond or you are getting bonded for the first time, the experts at SuretyBonds.com have years of experience issuing Indiana loan broker bonds, meaning they can get you the bond you need while saving you time and money. Call 1 (800) 308-4358 or visit SuretyBonds.com today to find out how much you can save on your Indiana loan broker bond.