A mortgage is a huge commitment for your clients, and they want to make sure that you’ll protect their interests. When you work in the mortgage industry, you need to hold a surety bond that shows your clients that you’re a responsible and ethical mortgage loan originator.
If you are a mortgage loan originator in Colorado, the type of surety bond you need is called a Colorado Mortgage Loan Originator Bond. This is different from a Colorado E&O (Errors and Omissions) policy.
Just looking on how to become licensed? How to Become a Loan Officer in Colorado.
What is a Colorado Mortgage Loan Originator Bond?
A Mortgage Loan Originator Bond (Colorado MLO Bond) is a type of surety bond. Even though a Mortgage Loan Originator Bond is sold by an insurance agency or surety company, it is not the same as insurance. The bond is not a protection for you, but for your clients.
- Learn about the differences between surety bond and insurance.
- Learn more about how surety bonds work.
If your clients feel you are not fulfilling your obligations as a mortgage loan originator, they can make a claim against your bond. If a surety company has to pay out on a claim, they will come to you for reimbursement. You are responsible for every penny of a bond claim.
Learn more about how to avoid mortgage bond claims.
How Much Does a Colorado MLO Bond Cost?
The bond amounts are as follows:
- Colorado Mortgage Loan Originator Bond – Individual: $25,000 bond
- Colorado Mortgage Loan Originator – Agency (less than 20 employees): $100,000 bond
- Colorado Mortgage Loan Originator Bond – Agency (more than 20 employees): $200,000 bond
The price you pay for your bond is a percentage of this amount. At Surety Solutions, we can get you bonded for as low as $100.
Get a free Colorado MLO Bond quote
How Does a Colorado Mortgage Loan Originator Bond Work?
A Mortgage Loan Originator Bond protects your clients. It ensures your clients that if you cause them a financial loss during a business transaction, they can seek reimbursement.
Acts that are covered in this bond include:
- Defrauding or misleading borrowers or lenders
- Failing to disclose information to the state/your clients
- Advertising a product at a low price when it is actually not available for the client
- Collecting or charging illegal fees
- Failing to follow your state rules and regulations
If you violate any of the above (or any terms of the bond agreement) and one of your clients is harmed, they can make a claim on your bond. If the surety company determines the claim to be valid, they will reimburse the client. It is your responsibility to repay the surety company.
Learn more about how to avoid mortgage bond claims.
Colorado Errors and Omissions Insurance
A Colorado MLO Bond is different from a Colorado Errors and Omissions (E&O) policy. An E&O policy is a protection for a mortgage loan originator. This policy covers the MLO from lawsuits due to honest mistakes. This is also another requirement to become a Loan Officer in Colorado.
Other Information About the Colorado MLO Bond
Colorado MLO Bonds are continuous unless canceled. If the bond is to be canceled, the surety must provide 30 days written notice before cancellation.
For a complete list of insurance requirements (surety bond and E&O) you can visit the Colorado Department of Regulatory Agencies website.
Related Links:
How to get Colorado Errors and Omissions Insurance
