Home construction and ownership is another area where surety bonds play a significant role.

Along with contractors, subcontractors and other builders, even mortgage brokers are required to obtain a surety bond. Mortgage Broker Bonds are typically required by each state’s Department of Banking in order to secure a proper operating license. In short, you can’t work as a mortgage broker without a surety bond.

These bonds guarantee the broker’s license and help protect consumers against fraud or other illegal or illicit activities. Mortgage Broker Bonds ensure the mortgage broker follows the rules and regulations spelled out by a licensing board or code.

Mortgage Broker Bonds also protect public officials and agencies, which are supported by tax dollars. State officials can recoup expenses, fees and fines in the event of problems or noncompliance on the part of a particular mortgage broker.

Some of those problematic practices may include:

• Approving a loan larger than a borrower can afford
• Pushing a borrower to engage in fraud during the application process
• Pressuring buyers into riskier loans
• Charging needless fees

The cost of Mortgage Broker Bonds depends on geographic location. The minimum is typically between $10,000 and $50,000. But rates have fluctuated significantly in the last few years because of the economy.

Mortgage brokers who qualify can still get good rates on Mortgage Broker Bonds. Some underwriters have introduced greater scrutiny in recent years. Others are less willing to write these bonds in certain states because of legislative or regulatory changes. It’s typically best to check with a reputable surety bond agency to be sure.