In today’s Illinois real estate market, buyers must be ready to make quick decisions when purchasing a home. According the Illinois Realtors July 24, 2017 news release, Illinois is experiencing a shortage of residential housing inventory, which in return results in fewer choices when purchasing a home. Buyers must be prepared prior to providing an offer on a house to ensure that they have adequate purchasing power and will qualify for the loan they need. This includes receiving a financial prequalification to submit with the offer or usually within a few days of the offer. Buyers often turn to mortgage brokers to take them through the buying process and to get them the best interest rates for the type of loan they need.
Residential Mortgage Brokers in Illinois must apply for a license prior to offering services, negotiating, funding, originating or purchasing a loan for compensation to any borrower. License requirements include having a $50,000 minimum net worth for in state mortgage brokers, and $150,000 for mortgage brokers that do not have an Illinois office. Mortgage brokers must also provide annual financial statements to ensure that the net worth of the business meets the minimum state requirements.
Additionally, residential mortgage brokers must obtain a minimum $50,000 surety bond. The bond amount is based on the total amount of loans written annually. If the total amount of loans is over $5,000,000 but is less than $20,000,000, a $50,000 surety bond is required. If the total loan amount is more than $20,000,000 but less than $50,000,000, a $75,000 surety bond is required. If the total amount of loans is more than $50,000,000 but less than $100,000,000, a $100,000 surety bond is required. And if the total amount of loans exceeds $100,000,000, a $150,000 surety bond is required.
Surety bonds over $50,000 will need personal and financial documents submitted when applying for the bond. Since the surety bond amounts are higher, the risk for the surety is greater. The financial documents will be reviewed by an underwriter whom will determine the rate to be quoted and if any collateral will be required. The rate is the premium that will need to be paid to ensure compliance for the license requirement.
The surety bond guarantees that mortgage brokers will comply with the Residential Mortgage Act of 1987, including general lending practices, loan application practices, loan brokerage practices, allowable advertising practices, commitment of loan and closing practices.
In addition to the surety bond, a $100,000 fidelity bond is also required. This bond ensures that any payments or securities the mortgage broker has received or has custody of for a residential mortgage loan are cared for properly. Failure to properly care for the funds could result in a claim against the bond, loss of the broker’s license, or in some cases criminal prosecution.
Illinois mortgage brokers can obtain the surety and fidelity bonds they need to meet the license requirements. SuretyGroup.com offers great rates, same day service and best of all, SuretyGroup.com has the bond you need! Email firstname.lastname@example.org, apply online or call our Surety Bond Specialists today at 1‑844‑432‑6637!
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