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 NMLS Electronic Surety Bond  

 

 Purpose of Electronic Surety Bond Tracking

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.

 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.

 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?

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

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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