June 21st, 2010
Why is getting a Surety Bond difficult?
Surety bond programs have been on the rise. More Surety Companies are writing low risk bonds for clients that have qualification issues. A few months ago if you had credit issues and you needed a defective Title Surety Bond you where subject to high rates and possible collateral. Now surety companies are taking on a common sense approach.
What’s the catch?
One problem you may still face is minimum premiums. The majority of Lost title Bond amounts are under a $1,000, the cost for the bond may be anywhere from $150 to $250, but if you consider that the only other option was 100% collateral it’s well worth it. If you post 100% collateral for your surety bond the state may retain your collateral up to the statue of limitations. Do you really want to tie up your money with the state; when you may only have the vehicle for a few months? How long do you think a cheap used car for a $1,000, will last?
What is a defective title bond?
A defective title bond is a required by the dmv to register a trailer or vehicle in your name when the original title cannot be procured. Applying for a surety bond is similar to apply for a loan the surety reviews your financial standing to determine surety credit. If you have a claim on your surety bond the surety will reimburse the obligee and then you must pay the surety back for the loss. A defective tile bond can also be referred to as a lost tile bond.
Defective title bonds are usually written for a four year term. Bond amounts are 1.5 to 2 times the value of the vehicle, its different for each State, so always check with your local DMV.
May 21st, 2010
S 327 has just passed
Alabama boxing commission now regulates mixed martial arts matches. MMA promoters will now be subject to existing licensing and bonding requirements that boxing promoters are subject too.
May 20th, 2010
S 103 is a new law that was recently passed in the state of Alabama.
s 103 will require a $15,000 surety bond for businesses involved in wastewater systems. This new law will require business to register and obtain a pumpers license. The law also requires licensure for those involved in installing, transporting, pumping, servicing, repairing, maintaining, and cleaning portable toilets.
May 19th, 2010
S 138 was just passed requiring Appraisal Management Companies to register their business and become license and bonded. The State of New Mexico will requirer real estate management companies to post a surety bond not less than. S 138 will also limit the amount of appraisal fees charged. July 1, 2010 the bonding requirement will go into effect
More information from the state about the bond requirements
“In order to qualify for registration or renewal
of registration, an appraisal management company shall
maintain a bond underwritten by a corporate surety authorized
to transact business in New Mexico, or other equivalent means
of security. The board shall set by rule the amount and
conditions of the surety bond or other equivalent means of
security required by this section, provided that the amount
of the bond or security required shall not exceed twenty-five
thousand dollars ($25,000).”
May 17th, 2010
What is a surety bond
A surety bond is different from insurance in many ways. If you have a insurance claim the principal pays the deductible and the insurance company covers the rest of the claim. With surety bonds if you have a claim, the surety restores the obligee to it’s original condition then the principal must restore the surety company to its original state. A surety bond involves three parties the first party is the obligee, the second party is the principal and the third party is the surety company.
How does it work?
So basically a bond works like this. The surety assumes liability for the principal if the principal fails to perform its obligations to the obligee.
What is a principal?
The Principal is the primary party who will be performing the contractual obligations. When applying for the bond the principal’s credit, financials and experience will be used to determine surety credit.
What is a surety company?
A surety company is the third party that will be backing the principal in the event of a claim. A surety company is regulated by the department of insurance. If a bond is needed for a federal license or federal contract the surety must be registered and approved by the Department of treasury and on the circular 570 list.
What is an obligee?
The obligee is the party that requires the principal to obtain bonding. The surety bond protects the obligee not the principal.
Who requires bonding?
Bonding can be required by pretty much anyone, but normally bonding is required in connection to a license or permit. These bonds are simply known as license and permit bonds. The State or Federal government will not grant your business license until the license bond is procured. Surety bonds can also be required to guarantee that the construction of a project will be completed. These bonds are known as Performance and payment bonds.
May 14th, 2010
Nebraska is in the news for a new law that was recently passed. LB 579 requires professional employer organizations to obtain bonding if they have a negative working capital. If a PEO in Nebraska has a negative working capital they will be required to obtain a surety bond to make up the deficiency plus an additional $100,000.
May 13th, 2010
Oregon has passed a new law H-3624 this new law effects appraisal management companies. The new law requires appraisal management companies to register their business and obtain bonding. The surety bond amount will be set at $25,000
A few things that the bond covers:
(a) Be conditioned that the applicant pays:
(A) All amounts owing to persons who perform real estate appraisal activity for the appraisal
management company; and
(B) All amounts adjudged against the appraisal management company by reason of
negligent or improper real estate appraisal activity or appraisal management services or
breach of contract in performing real estate appraisal activity or appraisal management
(b) Require the surety company to provide written notice to the department by registered
or certified mail:
(A) At least 30 days before the surety company cancels or revokes the bond; or
(B) When the surety company pays for a loss under the bond
May 12th, 2010
West Virgina has revamped their Surety Bond law with H 4285. Any person not subject to the existing Mortgage laws for licensing requirements, must now obtain surety credit. Mortgage Broker’s or Mortgage lenders must now provide surety bonds for their loan originators.
Loan originators must also complete a back ground check and furnish it to the Nationwide Mortgage Licensing system.
Loan originators must also complete a minimum of 20 approved education hours.
Courses must be taken to meet the following standards:
(1) Three hours of federal law and regulations
(2) Three hours of ethics, which shall include instruction on fraud, consumer protection and fair lending issues
(3) Two hours of training related to lending standards for the nontraditional mortgage product marketplace
(4) Two hours of training related to West Virginia mortgage and consumer laws or issues.
(5) Ten hours of state approved nonspecific training.
For more information about the loan originator Surety bond follow our blog
May 11th, 2010
Washington has recently passed a new law s 6371/h2636. This new law effects Money transmitter bond amounts. Currently Money transmitters in the state of Washington have to carry a surety bond ranging from $10,000 to $50,000. Money transmitters in Washington also have to have a $10,000 Surety bond for each office location.
The new law revises the surety bond amount and how the amount is calculated.
The Surety bond amount will now be based on the dollar volume of the prior year’s money transmissions and the dollar volume of the prior year’s payment instruments.
The new bond amounts will range from $10,000 minimum to $550,000 maximum. This new law will go into effect 6/10/2010
May 10th, 2010
HB 2191 (2009)
The Debit Management Service providers bond is required for all types of “debt management” services including debt settlement, some loan modification companies, credit repair companies, debt proration and financial education programs.
“Debt Management Service” means performing any of the above activities for which a person receives money or other valuable consideration or expects to receive money or other valuable consideration.
With HB 2191 you are required to register with the Department of Consumer and Business Service and obtain bonding.
The Surety bond for Debit Management Service providers is a $25,000 Surety bond. It has a 30 day cancellation clause in the bond form.