Whether you’re just stepping into the mortgage broker or escrow field or expanding your services, it’s important to understand how surety bonds work.
Who Needs Them?
Many professionals in the real estate finance sector are required to carry surety bonds. In most states, they are mandatory for mortgage brokers and escrow licensees. Depending on where you are located, you may not even be issued a license without having proof of a surety bond.
For mortgage brokers, these bonds provide a guarantee that you will comply with state and federal regulations. Escrow licensees, who handle clients’ money directly, are often required to secure surety bonds to protect clients’ funds and demonstrate youe commitment to acting responsibly.
What Exactly Are Surety Bonds?
At their most basic level, surety bonds are agreements that step in to protect clients if a business fails to fulfill its legal or financial commitments. They act as a kind of safety net, bringing these three main parties into an agreement:
1. Principal
This is typically the mortgage broker, escrow licensee, or other real estate professional obtaining the bond.
2. The Party Requiring the Bond
For example, a government agency who needs assurance that the principal will meet their obligations.
3. Bond Provider
This is the bond company who essentially guarantees that the principal’s commitments will be met. If the principal falls short, the surety bond helps to cover the resulting losses.
If a mortgage broker or escrow licensee drops the ball, whether it’s a financial misstep or a failure to meet legal standards, the surety bond is there to cushion the blow for the client.
How Surety Bonds Work
Surety bonds are there to help cover client losses if a mortgage broker or escrow licensee fails to fulfill duties or mismanages funds. Clients trust mortgage brokers and escrow companies to handle funds responsibly, fulfill obligations, and operate ethically. These fields of work involve significant amounts of money and with that comes serious legal responsibilities. A surety bond provides clients with an avenue for financial recourse should things go awry.
Regulatory authorities require bonds as a method of maintaining industry standards. It encourages professionals in the industry to be transparent, accountable, and ethical.
How to Secure a Surety Bond
It’s easy to get a surety bond. Here’s a quick overview of how it works:
Check Your Requirements
First of all, you should check if you need a surety bond, and what amount of bond is required in your state. .Apply to a Bond Provider
Work with a reputable provider and choose a company that is familiar with real estate finance. Surety Solutions (CRES’ sister company) has a solid background in surety bonds for real estate professionals.
Submit Financial Documents
Some bonds may require financial documentation to be submitted. Providing these documents allows the bond provider to assess your financial standing and offer the right level of protection.
Receive and File Your Bond
Once you’re approved, you’ll receive the bond to file with licensing authorities or regulatory bodies. When you partner with a provider who knows the mortgage and escrow sectors, getting a surety bond is a simple process.
Protect Your Business – How Surety Bonds Can Make a Difference
CRES works closely with Surety Solutions to offer specialized protection backed by over 25 years of experience serving professionals in real estate and related industries. Together, we understand the unique challenges you face..
Are you ready to secure your surety bond? Contact the Surety Solutions team today at 503-967-1675 or buy your surety bond online.
If you’re not sure if you need a surety bond or you’re struggling to work out what type of surety bond you need or what amount:
Contact Alli Davis at Surety Solutions
Email Alli or call 503-967-1675
She also handles Surety Bonds previously issued through CRES.
