Mortgage Loan Originator - Surety Bond Instructions
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 MLO surety bond.
Note: Loan Originators that are not covered by an Originating Entity MLO surety bond must maintain an individual Mortgage Loan Originator surety bond.
If an Originating Entity maintains a licensed mortgage loan originator Originating Entity surety bond covering some or all of its licensed mortgage loan originators, such bond shall be based on the chart set forth below. However, pursuant to Section 420.15(c), the Superintendent can require an Originating Entity to maintain a bond in a penal amount greater than the limits set forth in the chart below:
| Number of New York Sponsored 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 mortgage loan originators, including MLOs with Temporary Authority. 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 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:
- Mortgage loan originators covered by an individual surety bond must aggregate the volume of loans originated at all originating entities for the preceding calendar year to determine the required amount of the surety bond;
- Originating Entity Bond
- For employees and independent contractors, including MLOs operating under Temporary Authority, the Originating entity must maintain an Originating Entity MLO Surety bond sufficient to cover the number of MLOs sponsored by such entity. See 3 NYCRR 420.15(b).
Submission of Surety Bond Certification Form
Individual Certification Form: The Individual surety bond certification from must be submitted upon initial submission of a surety bond to the Department of Financial Services and with each surety bond rider related to a change in sponsorship, penal amount or name of MLO).
Originating Entity Certification Form: The Originating Entity Certification form must be submitted upon initial submission of a surety bond by all Originating Entities with less than 50 sponsored MLOs, coverage of newly hired and sponsored MLOs and change in penal amount of bond.
General Instructions
Surety Bond and Certification Forms are available as follows:
- Individual MLO Surety Bond Form
- Individual Certification Form
- Originating Entity MLO Surety Bond Form
- Originating Entity Surety Bond Certification
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 Banking – MLO Surety Bond
One State Street
New York, NY 10004
If you require assistance regarding the surety bond requirements, contact the Department via e-mail at [email protected].