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DFS Applications: MLO Surety Bond Instructions

Effective July 31, 2010, each mortgage loan originator must be covered by a surety bond in accordance with Section 599-k of the Banking Law. Below are instructions for submitting the required Surety Bond and accompanying Surety Bond Certification Form.

Surety Bond Requirements

Licensed mortgage loan originators are required to maintain a surety bond based on the dollar volume of loans originated by the mortgage loan originator as determined by the following chart:

Required amount of bond

Aggregate $ amount of NY loans originated

$10,000

Less than $1,000,000

$15,000

$1,000,000 to $7,499,999

$25,000

$7,500,000 to $14,999,999

$50,000

$15,000,000 to $29,999,999

$75,000

$30,000,000 to $49,999,999

$100,000

$50,000,000+

Pursuant to Section 420.15 of the Superintendent’s Regulations, an Originating Entity may obtain a surety bond covering some or all licensed mortgage loan originators employed by the Originating Entity or who are independent contractors of the Originating Entity. Such a bond will satisfy the mortgage loan originator surety bond requirements, as outlined above, for those loan originators covered by the Originating Entity surety bond.

Note: Loan Originators that are not covered by an Originating Entity surety bond must maintain an individual surety bond.

If an Originating Entity maintains a bond covering some or all of its licensed mortgage loan originators, such bond shall be in an amount equal to the aggregate of the individual bonds required for the covered mortgage loan originators calculated as set forth above. However, the bond maintained by an Originating Entity to cover its mortgage loan originators is not required to be in excess of the amount outlined below or such other amount specified by the Superintendent pursuant to Section 420.15(c):

Number of Individuals who are Required to be
Licensed as Mortgage Loan Originators

Required Principal Amount of Surety Bond

less than 10

$100,000

10-15

$150,000

16-24

$250,000

25 or more

$500,000

An Originating Entity must ensure that all licensed mortgage loan originators operating under the Originating Entity’s MLO bond are covered under the mortgage loan originator’s legal name as licensed by the Department and ensure that such coverage remains in effect at all times during the period the mortgage loan originator is engaged in originating mortgage loans for the Originating Entity.

Mortgage loan originator bond coverage shall not be cancelled by either the Originating Entity, the mortgage loan originator or the surety company, except upon written notice to the Department by registered or certified mail with return receipt requested. The cancellation shall not be effective less than thirty (30) days after receipt by the Department of such notice.

Origination Volume

Individual and Originating Entity surety bonds amount will be determined based on the aggregate dollar amount of loans originated by the mortgage loan originator in the preceding year. However, a minimum bond of $10,000 must be maintained for individuals with no mortgage loan origination activity during the prior calendar year or twelve month period preceding date of employment (hire) or engagement as an independent contractor.

With respect to mortgage loan originators affiliated with more than one Originating Entity during the prior year, the following guidelines are to be followed:

Submission of Surety Bond Certification Form.

The surety bond certification from must be submitted upon initial submission of a surety bond to the Department of Financial Services.  The certification form(s) must list the name of individuals covered under the bond, such person’s originating volume (based on calculations as provided for above), the amount of coverage, the NMLS Unique Identifier for all covered mortgage loan originators, the date said mortgage loan originator was licensed by the Department and the date said coverage began.

Note: At the end of each calendar quarter, Originating Entities are required to submit a certification form identifying each MLO added to the Originating Entity Bond during that quarter. Individuals covered under individual bonds must submit a certification form immediately upon any change in license sponsorship.

General Instructions

Surety Bond and Certification Forms are available as follows:

Individual MLO Surety Bond Form (PDF)

Individual Certification Form (PDF)

Originating Entity MLO Surety Bond Form (PDF)

Originating Entity Certification Form (PDF)

Note: Originating entities and mortgage loan originators must use the Mortgage Loan Originator surety forms.  The Department will not accept the mortgage broker or banker form as coverage for the requirements of Section 420.15 of the Superintendent’s Regulations.

An original Surety Bond and Certification Form should be sent to the Department at the following address:

New York State Department of Financial Services
Mortgage Loan Originator Surety Bond
One State Street
New York, NY 10004

If you require assistance regarding the surety bond requirements, contact Oronzo Nardulli at (212) 709-5556 or via e-mail at oronzo.nardulli@dfs.ny.us