Surety Bond Information
Licensees, registrants, and applicants for a broker/processor license must have and maintain either a surety bond or a letter of credit from a federally insured financial institution in a form and terms acceptable and payable to the Department in the amount of $50,000.
Licensees, registrants, and applicants for a lender license must have and maintain either a surety bond or a letter of credit from a federally insured financial institution in a form and terms acceptable and payable to in the amount of $150,000.
The downloadable list of companies which offer mortgage surety bonds in Georgia is available from this link. Please note that the Department does not recommend any particular company, but provides the list as a convenience to applicants and licensees. Also remember to check with the Office of the Georgia Insurance and Safety Fire Commissioner to see if any insurer you are considering is authorized to do business in Georgia.
What is a surety bond and why do I need to have one or a letter of credit?
A surety bond is a three-party instrument between a surety (insurance company), the licensee, and the Department. The agreement binds the licensee to comply with the terms and conditions of the laws and regulations concerning the issuance of their license. If the licensee is unable to successfully meet those requirements, the surety assumes certain monetary obligations required for performance under that surety bond for the licensee, and ensures that the obligations are met. Such obligations may be those owed to qualifying consumers, other creditors, or the Department.
A letter of credit may be substituted for the surety bond and in effect allows the individual to self insure to meet the financial requirements for licensing. Often the licensee must provide a financial institution the full amount of the required bond, $50,000 or $150,000, as cash collateral for the letter of credit. Licensees often obtain a letter of credit in lieu of a bond either because they need to meet the financial requirements quickly or they do not qualify for an affordable surety bond.
It is important to note that the issuer of the letter of credit may require the cash collateralizing the letter to remain on deposit for a specified period of time after the letter of credit expires, to cover claims that might have arisen while the letter of credit was in force.
Can the Department return my bond?
It depends on the circumstances. The Department can only return a bond if the license was never approved. Send a letter to the Department asking for the bond to be sent back to you. However, if the license was approved, the Department cannot return a bond to a licensee or its surety.
Can the Department release the Surety from liability?
The Department cannot execute a general release that discharges a surety from any past, present or future liability under a bond.