Alabama Mortgage Broker and Consumer Credit License Bond

The Alabama Department of Banking and Insurance is the authority for licensing mortgage broker and consumer credit businesses. The regulations are outlined in the Alabama Mortgage Brokers and Lenders Act, the Alabama Consumer Credit Act and the Alabama S.A.F.E. Mortgage Licensing Act. Both of these licenses require the licensee to have a surety bond.

This surety bond is an agreement between three parties: 

• Principal: The mortgage broker or consumer credit company that needs to get the bond.
• Obligee: The entity requiring the principal to get bonded.
• Surety: The company that issues the bond.

When a mortgage broker or consumer credit company acts unethically or fraudulent, an injured party can file a claim against the bond. The surety researches the claim and determines if it is valid. For a valid claim, the surety will provide compensation to the claimant. 

Then, the principal is required to reimburse the surety for the claim amount. The financial impact of a claim is considerable, so avoiding claims against the bond is a top priority. 

The cost of an Alabama mortgage broker bond is between $500 and $7,500, depending on the required bond amount, which is based on loan originations. The bond amount ranges from $25,000 to $75,000, determined by the total volume of residential loans closed in the previous calendar year:

• $25,000 bond for loan volumes up to $25 million
• $50,000 bond for loan volumes between $25,000,001 and $100 million
• $75,000 bond for loan volumes exceeding $100 million

The bond premium is between 1% and 10%. This is also called the cost of the bond. Using the chart below, you can quickly estimate your bond cost before applying.

Often, our customers are curious about how we determine how much a bond costs. Bond rates are based on an applicant’s bond history, finances, industry experience and credit scores.

1. Apply For Your Bond

Obtaining an Alabama mortgage broker bond is an easy process. Begin by applying for your bond using one of these methods. 

1. Apply for a bond online – Our customers have access to our online application 24/7. Many customers can complete the form within a few minutes.  
2. Call us at (888) 592-6631 – If you have questions or prefer to apply by phone, our bond specialists are eager to speak with you. 

When applying, you will need:

• Bond name (Alabama Mortgage Broker Bond) 
• Bond amount ($25,000 - $75,000)
• Email and contact information

2. Get a Quote

We deliver bond quotes to our customers via email without delay. Our bond experts are available to review your quote with you upon request. If you have a revision request, please let us know. 

3. Purchase Your Bond

To wrap up your bond purchase, simply pay the invoice and sign the document online. The original bond will then be sent to your email address.

To apply for a Alabama mortgage broker license an electronic surety bond must be submitted with the other required documents to the NMLS. The Alabama Department of Banking and Insurance oversees licensing for mortgage brokers and ensures compliance with state bond requirements. 

Mortgage brokers must use the Alabama Mortgage Broker Bond, which serves as a financial guarantee ensuring compliance with state regulations and ethical lending practices.

The bond is continuous, but the surety has the right to amend or cancel the bond. To cancel the bond, the surety must provide the obligee and the principal with a 90-day notice.

If you have any questions regarding the required bond amount, the definition and role of mortgage brokers in Alabama, etc., please contact us.

When one of our customers contacted us for the first time, she had several questions about the bond amount required and how bonds work. Our bond specialists were happy to answer her questions, and they helped her submit her application over the phone. She enjoyed our excellent customer service and easy process. 

The licensing process for an Alabama mortgage broker or consumer credit company is completed through the Nationwide Mortgage License System. When you apply, the following items are required:

• Application
• Surety bond
• Financial statement
• Zoning statement

Additional documents required for a consumer credit company are:

• Secretary of State documentation
• Certificate of Existence
• A statement of other business
• Disclosure questions

Nationwide Mortgage Licensing System. (n.d.). Checklist compiler.
https://mortgage.nationwidelicensingsystem.org/slr/SitePages/Checklist-Compiler.aspx

Alabama Department of Banking and Insurance. (n.d.). Home. Alabama Department of Banking and Insurance.
https://banking.alabama.gov/

Nationwide Mortgage Licensing System. (2022, August 31). Alabama consumer bond form. Nationwide Mortgage Licensing System.
https://mortgage.nationwidelicensingsystem.org/slr/StateForms/Alabama%20Consumer%20Bond%20Form%20_8.31.2022_V1.pdf

Alabama Department of Banking. (2023, August). Alabama Mortgage Brokers and Lenders Act (2009). Alabama Department of Banking.
https://banking.alabama.gov/wp-content/uploads/2023/08/AL_MB_Act_2009.pdf

Casetext. (n.d.). Alabama Administrative Code, Title 155, State Banking Department, Bureau of Loans, Chapter 155-2-2: Alabama Consumer Credit Act regulations. Casetext.
https://casetext.com/regulation/alabama-administrative-code/title-155-state-banking-department-bureau-of-loans/chapter-155-2-2-alabama-consumer-credit-act-regulations

Alabama Department of Banking. (2023, August). Alabama secure and fair enforcement mortgage licensing act (SAFE Act). Alabama Department of Banking.
https://banking.alabama.gov/wp-content/uploads/2023/08/AL_Secure_Fair_Enf_Mortgage_Lic_Act.pdf