- Mark Madsen
- May 15, 2014
A bond is required for licensure in certain states. Isn’t this the same bond that may be required by the warehouse lender?
Many people can be confused by the word “bond”. In the case of licensure, the bond is usually one that benefits the state issuing the license to the mortgage originator and it is usually on a form promulgated or otherwise approved by the state issuing the license. Bonds benefiting the states are generally required in lieu of cash deposits for consumer recovery funds and/or audited net worth requirements. Generally the surety bonds issued in connection with a licensure serve as a financial support to pay claims that might be levied by consumer due to acts committed by the licensed party. A bond issued as a condition of licensure and which is issued for the benefit of the license-issuing state are not the same as fidelity bond coverage customarily issued to a mortgage banker.