Mortgage Lender State Surety Bonds
As with everything else in the mortgage business right now, State Surety Bonds are HARDER to get than ever and at the same time the amounts required by the state licensing boards are HIGHER than ever!
Our home office is in Florida where only a $25,000 bond is required, which was very easy to get. We are in the process of expanding into Mississippi and Georgia who require $150,000 each in surety bonds.
The application process for $300,000 worth of bonds was more stringent than the $10 Million worth of warehouse lines we had just applied for. Some companies are requiring a 30% Irrevocable Letter Of Credit as collateral. I have better things to do with $90,000 than fund up a IRLOC.
We finnally found a company that did no require the letter of credit due to our high corporate net worth, high personal net worth, and personal guarantee.
Don’t take the surety bond approval process lightly. I would recommend securing your bonds BEFORE you even consider applying for any state licenses. You need to figure out how much in bonding you can qualify for and then figure out how you want to use it among the states.
You could end up wasting all of your bonding approval on one state, so figure out the total amount you can get and line up all the states you are interested in before making any decision. I know a lot of lenders right now who are having to rethink their state licensing plans due to lack of surety bonding.