New York mortgage lenders are required to get a license and purchase a surety bond during that process. Read on to find out how to get licensed and learn more about the surety bond.
How to get a New York mortgage lenders’ license
In New York, mortgage lenders are also called mortgage loan originators. Lenders or originators need to be licensed as such if they take residential mortgage loan applications or offer or negotiate terms of a residential mortgage loan. As in many states, the New York Department of Financial Services (DFS) uses the Nationwide Multistate Licensing System (NMLS) to begin the licensing process for mortgage lenders.
The NMLS has put together a checklist for New York mortgage lender applicants to ensure they submit complete information to the DFS. Before applying, applicants must complete 20 hours of approved pre-licensure education and must meet one of these testing conditions:
- Passing results on the National and New York State components of the SAFE test, or
- Passing results on the National and Stand-alone UST components of the SAFE test, or
- Passing results on the National Test Component with Uniform State Content
Applicants pay a series of fees to get a license:
- NMLS initial processing fee—$30
- New York application fee—$379 (includes $125 investigation fee and $254 license fee)
- Credit report fee—$15
- FBI criminal background check—$36.25
- State criminal background check and fingerprinting fee—$99
The DFS requires submission of the following information through the NMLS:
- Completed Individual Form (MU4)
- Criminal background check authorization
- Credit report authorization
- Disclosure questions and supporting evidence, if applicable
- Company sponsorship submitted by applicant’s employer
- License affirmation certifying that there are no false statements made in the application
Read the checklist to be sure you include all required information, since this list is not exhaustive. License applications deemed complete by the DFS are published in their Weekly Bulletin each Friday. If an application is deemed incomplete, lender applicants have 30 days to complete it. Notice of approval, denial, or incompletion will be mailed to the mortgage loan originator applicant. Licenses expire every year on December 31.
Surety bonds for NY mortgage lenders
New York mortgage lenders do not submit a surety bond until their license has been approved, and they must submit the original bond. The amount of bond lenders need to post depends on the dollar amount of mortgage loans originated in the previous year, as follows:
- Less than $1,000,000 in originated mortgage loans or initial bond amount—$10,000 bond
- $1,000,000-$749,999,999 in originated mortgage loans—$15,000 bond
- $7,500,000-$14,999,999 in originated mortgage loans—$25,000 bond
- $15,000,000-$29,999,999 in originated mortgage loans—$50,000 bond
- $30,000,000-$49,999,999 in originated mortgage loans—$75,000 bond
- $50,000,000 or more in originated mortgage loans—$100,000 bond
The bond is mortgage lenders’ promise that they will follow the Banking Laws of New York Article 12-E. Mortgage loan originators employed by an Originating Entity licensed under Article 12-D of the Law may be covered by an Originating Entity surety bond. That bond amount is based on the number of employees it covers:
- Less than 10—$100,000 bond
- 10-15—$150,000 bond
- 16-24—$250,000 bond
- 25 or more—$500,000 bond
The bond is a reassurance to customers that the mortgage lender or originating entity is following the law, and provides a course of action for reimbursement should the lender break any of those laws. Along with the original bond, entities and individual applicants need to submit a bond certification form, which can be found at the bottom of the DFS’s surety bond instructions page.
Get in touch with Absolute Surety and get the best rate for your New York mortgage lender surety bond!