Because of the SAFE Mortgage Licensing Act of 2008, any mortgage loan originator in the state of Michigan must hold a Michigan Mortgage Loan Originator (MLO) Bond to legally conduct business. There are exemptions to this license. Exemptions can be found by going to the NMLS website.
A Mortgage Loan Originator Bond (Michigan 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.
There are two surety bond options:
How Much Does a Michigan MLO Bond Cost?
The bond amounts are as follows:
- First time applicant: $10,000 bond
- Currently licensed, closed less than $12 million in loans previous year: $10,000 bond
- Currently licensed, closed between $12 million – $24 million in loans previous year: $25,000 bond
- Currently licensed, closed more than $24 million in loans previous year: $50,000 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.
How Does a Michigan MLO Bond Work?
When you get a Michigan MLO Bond, you are working to protect the interests of your clients. This bond will protect your clients in case you or your employees do not abide by the law, encourage your clients to take on mortgage loans that they cannot afford, or engage in other dishonest, inaccurate, or untrustworthy actions.
Holding a Michigan Mortgage Loan Originator Bond shows that you have a history of acting in an honest and competent manner.
Acts Covered In The Bond
- 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 Michigan Mortgage Loan Originator Bond.
If the surety company determines the claim to be valid, the surety will reimburse the client. It is your responsibility to repay the surety company.
More About the Bond
Your Michigan MLO Bond must have an expiration date of December 31. To renew a mortgage loan originator license, a new surety bond or continuation certificate executed by the surety with an expiration date of December 31 is required.