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 NMLS Electronic Surety Bond 

Many state laws or 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 to provide restitution to consumers due to the failure of a licensee to comply with licensing or statutory requirements.

In addition, Title V of P.L. 110-289, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”) requires that applicants have met “…either a net worth or surety bond requirement, or paid into a State fund…” in 12 USC §5104(b)(6). As of November 2016, 55 state agencies required a surety bond for one or more of the licenses they manage though NMLS. (The remaining agencies have established a state recovery fund.) State regulations define the specific surety bond requirements (e.g. amount of coverage) that must be satisfied in order to obtain, maintain, and renew a license in the state.

Over 250 license authorities managed on NMLS required the company to obtain and maintain a surety bond as a condition of licensure. As more state agencies choose to manage license authorities on NMLS, SRR expects this number to grow.

One of the primary goals of NMLS is to serve as the comprehensive system of record for licensing information. Electronic Surety Bond Tracking in NMLS will allow for the tracking of surety bond requirements and the maintenance of surety bond information validated by authorized Surety Companies and/or Surety Bond Producers.

See About NMLS for additional information on the System.

 NMLS Electronic Surety Bond Training

See the Training Workshops page for a listing of upcoming live trainings, as well as a list of recorded webinars.

NMLS Electronic Surety Bond Training

Click the link above to access a self-paced online course that provides training and resources for Surety Companies, Surety Bond Producers, and NMLS Licensees. Topics include:

  • NMLS Resource Center Information
  • Creating and Managing Your NMLS Account
  • Creating and Managing Associations
  • Creating and Managing Electronic Surety Bonds

 What do I need to do to get started?

SRR will be supporting the submission of Electronic Surety Bonds through NMLS. The first phase of this effort began January 25, 2016 with the implementation of account creation and association for surety companies and surety bond producers. The second phase began on September 12, 2016 with the implementation of bond issuance, tracking, and maintenance for select states. Following Phase I and II, SRR will continue to evaluate the functionality to determine appropriate enhancements to meet industry needs.
 
Select the appropriate button below for more information related to your specific entity type. 
 
 

 

 

 

 ESB State Adoption

See the ESB Adoption Table for a list of participating state agencies and information on required transition dates. Also, see the Surety Companies and Producers authorized to issue bonds for the participating states.

 Related Resources

NMLS Account Creation Work Flow Diagram
A visual aid highlighting the account creation process with step-by-step details and interactive links to applicable Quick Guides.

NMLS Association Process Diagram
A visual aid highlighting the association process between a surety company and a surety bond producer with interactive link to applicable Quick Guides.

Terms and Definitions

 Commonly Asked Questions

Q: Is the licensee going to notify their surety bond producer or surety company of the need to convert an existing bond in NMLS?

A: It will be a joint effort among the surety entities and the licensees in regards to starting the conversion process. To support this initiative, NMLS is delivering communication and training sessions to both licensees and surety entities regarding the new ESB functionality. This includes the State Adoption Map and Table and a license item placement informing licensees of their need to convert their bond using the electronic method. Also, the state regulators participating in the ESB functionality may be sending communication to their licensees impacted to alert them to the expectations regarding deadlines and requirements.

Q: Are electronic surety bonds available for branch and individual bonds at this time?

A: No, the electronic surety bond functionality is not available for branch and individual bonds. At this time, only the company bonds listed on the State Adoption Map and Table are impacted.

Q: The terminology on NMLS is different from what I am used to, is there a reference guide?

A: The Electronic Surety Bond Glossary provides terminology definitions and synonyms to assist users.

Q: Is it the responsibility of the surety entity to request access to the licensees’ NMLS account in order to begin the bond creation process?

A: No, the NMLS licensee is responsible for granting authority (access) to the surety entities (producer or company) through their NMLS account. The ESB functionality enables the existing NMLS licensee to search for the surety entities by NAIC/NPN identifiers or company name in NMLS and then select the company to grant authority.

Q: Will the electronic surety bond process change the way we assign bond numbers? 

A:  Surety bond producers will continue to use the bond numbering process currently used outside the System, prescribed by the underwriting company. 

NOTE: This is a freeform field, therefore it will be very important that data is entered using the appropriate format. As a best practice, it is recommended that you confirm if any special characters (such as #, -, and _) are used by your underwriting company. 

Q: Can a surety entity create multiple bond riders for the same bond at one time?

A:  Only one rider per bond can be created at a time and the rider must be signed by the licensee (principal) before another rider for the same bond can be created. However, you are able to have multiple pending riders at the same time for different bonds. 
 
Q: What are the available processes that can be completed in the NMLS for surety entities?

A: To better understand the purpose and available processes in NMLS, please reference the diagrams provided below.

*NEW* Q: With the new bond form version functionality, will surety companies be able to first “approve” the new bond form version before the Surety Bond Producer (SBP)/agent is eligible to complete the bond upgrade/revision process?

A:  No. At this time the functionality will allow an SBP/agent to complete the bond upgrade/form revision process without prior system-facilitated approval. Both the surety company and agent impacted by the bond upgrade/form revision requirement and should communicate outside of NMLS to ensure approval prior to completing the process. Future ESB enhancements will include system-facilitated approval with bond form versioning.

*NEW* Q: With the new update, will the surety company be able to change a license type on a new/converted bond before it has been accepted by the regulator?

A: The NMLS 2017.1 Release enables a surety company identified by an SBP/agent during bond creation to edit the bond when it is in “Pending Representative Signature” status. Once the bond has been signed by a surety/agent representative, the bond can no longer be edited to reflect a change from new to converted or vice versa unless the principle (licensee) returns the bond to the surety as a result of the error.

*NEW* Q: When a surety company is connected to a bond producer, what level of authority do they have to issue bonds?

A: SBPs/Agents are granted full execution authority via the association process. Surety companies may utilize their Manage Bonds list and the Surety Company Transaction Report to track bonds created and managed by associated agents.

Electronic Surety Bond Overview                                     
Surety Company Account Creation Process               
Surety Bond Producer Account Creation Process
Surety Entity Account Management
Association Creation Process                                            
Licensee Grant Authority to Surety Entity Process
Bond Creation Process                                    
Bond Execution Process
Bond Rider Creation Process
Bond Management Process: Cancellation, Rescinding Cancellation, Reinstatement (Surety Company)                                 
Broker of Record Change Process
Electronic Surety Bond Process (Print all)

For a full list of commonly asked questions, please see the FAQs .

 

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