Mortgage Surety bonds are not the same as a Mortgage bond you would purchase as a investment. A Mortgage Surety bond is required by the majority of states in order to obtain a mortgage License and transact loans. Typically the average bond amount is set at $25,000. Always check with the state to obtain the current bond form as well as the amount needed.
Mortgage Surety bond
April 2nd, 2010Is it worth it to get a surety bond
April 1st, 2010There are bond alternates, but are they as good as a surety bond.
First alternate instead of paying for a surety bond you could post 100% collateral with the obligee if they allow it. Some obligee accept a cashiers check or a ILOC. A ILOC stands for irrevocable letter of credit. The obligee may provide sample verbiage of how they want it to be written or you bank has a sample form all ready drafted. If you decide to obtain a ILOC the bank normally will want the ILOC to be secured by assets or cash. Banks also charge a fee for providing these services. The prices for a ILOC is around the same price for a surety bond.
The problem with collateral is that it may take you several years before the collateral is returned to you. The obligee normally will not release the collateral until your business has been released of all liability. Keep in mind that there is no statute of limitations on fraud. From what I have been told from customers it takes on average of 3 years with some obliges to release your collateral. I once had a client that took 6 years for to get his collateral back. He had to jump though several hopes before they would even consider returning his money back to him. The obligee required for the client to obtain a surety bond and have the surety write a letter stating that they would consume all past liability. With the way the market is today I don’t see a surety doing that again.
In this economic climate I would rather pay a small premium rather then tying up $10,000 or $25,000 of my working capitol.
Do surety companies perform background checks?
April 1st, 2010Do surety companies perform background checks?
Many people call and ask if I get a fidelity bond will the surety perform a background check on my new hires? The answer is no. You would think that it would be in the surety’s best interest to do so, but the cost would outweigh the premium.
Some surety companies’ offer discounted services for using companies they recommend for background checks.
A Fidelity bond is more of an insurance policy than a bond. Limits for this type of coverage’s start at 25,000 and can go as high as a $25,000,000. A fidelity bond is a essential insurance product that ever business owner should carrier.
Fidelity bonds protect the policy owner from employees that steal from them
Surety still important
March 24th, 2010If you have never needed a bond until now you’re probably have no idea what a surety bond is?
A surety bond is usually required by a state in order to obtain a license. There are thousands of different types of bonds, covering car dealerships to contractors, there’s practically a bond for every type of business.
History
Surety bonds can be dated back to the Mesopotamian days; it’s the oldest form of insurance. There is evidence of Individual Surety Bonds in the Code of Hammurabi and in Babylon, Persia, Assyria, Rome, and Carthage.
What does a bond do?
Surety bonds do not protect you, but the obligee. So why do you need a bond if it does nothing for you? The answer is because you have to have one in order to obtain your license. Sometimes the obligee will waive the bonding requirement if you post a cash bond or an ILOC. The problem with doing that is that the state “obligee” may hold on to your collateral until all liability has been released. You are probably asking yourself now how long does that take. The answer is they can hold your collateral until the statue of limitations runs out and there are no statues of limitations on fraud.
How is a surety bond rate determined?
The rate is equated by many factors state, bond type, credit, personal net worth, business net worth and experience.
If you are not ready to apply for a bond and you just want to see what the surety bond could cost, check out our surety bond quick quote.
Iowa Surety bond for Solar Panel Contractors
March 24th, 2010SB 2283 – Solar Panel Contractors.
A new surety bond requirement may be required for contractors in Iowa that install solar panels.
This new state law will will make solar panel installers have the same licensing and bonding requirements that plumbing, HVAC, refrigeration and hydronic contractors have.
AZ Appraisal Management Companies Surety Bond
March 23rd, 2010If S 1351 passes Appraisal Management Companies will be required to register a $50,000 Surety Bond. The details for the Appraisal bond would be determined by regulations. Status: 3/1/10 – In Senate; in Rules, proper for consideration amended
Motor Vehicle Auctions Surety bond
March 20th, 2010Missouri Motor Vehicle Auctions
If this new law passes it would regulate special event motor vehicle auctions that take place over the course of three days; would require licensure to post a $100,000 MVD surety bond
Status: 2/16/10 – In House Special Standing Committee on Infrastructure and Transportation Fund; public hearing completed
H 1636/S 781 – Motor Vehicle Auctions.
I have not had the chance to review the bond form, but once I get a copy of it I will post it
Debt Management surety bond for the state of IL
March 19th, 2010H 4682 – Debt Management. Would amend the Debt Management Service Act; would require debt relief service providers to post a $25,000 Surety bond, and debt settlement service providers to post a $75,000 Surety bond.
Status: 1/4/10 – In House; referred to Rules
Still no word on this new requirement. As soon as we hear something we will let you know
CONNECTICUT MVD Surety Bond update
March 19th, 2010S 414 – Motor Vehicle Dealers. Increases the dealer surety bond from $20,000 to $50,000. 3/5/10 – In Joint Committee on Transportation; public hearing scheduled for 3/10
Arizona Cemetery Salespersons and Brokers Bonds
March 18th, 2010Would appear to repeal the surety bond requirement for cemetery salespersons and brokers. Current law requires a surety bond ($100,000 maximum) from such persons if they have committed violations of the law, been convicted of a felony or misdemeanor for fraud or any conviction involving real estate transactions, or if they had an administrative order entered against them. Status: 1/25/10 – In Senate; referred to Rules; read second time
The Surety bond amount of $100,000 makes it virtually impossible for the principal to qualify unless they have a net worth of $250,000. Instead of abolishing the law they should consider lowering the maximum amount required.
S 1177 – Cemetery Salespersons and Brokers.
