Many state laws and regulations require financial services licensees to obtain a surety bond as a condition of licensure. State regulators or consumers can file claims against a surety bond to cover fines or penalties assessed or provide restitution to consumers due to failure or a licensee to comply with licensing or regulatory requirements.
In addition, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) requires applicants to meet "...either a net worth or surety bond requirement..." Currently, 48 state agencies require mortgage loan originators (MLOs) to either have their own surety bond or be covered under a company's surety bond in order to originate mortgages. 177 license authorities managed on NMLS require the company to obtain and maintain a surety bond as a condition of licensure.
Previously, NMLS functionality had been limited to the uploading of a surety bond document. The current hard copy requirement is outdated and will be transformed to a fully electronic process that will provide efficiencies for industry and certainty for regulators starting with the System update in September 2016.