Illinois, Tennessee departments to receive new electronic surety bonds in NMLS

ILLINOIS — The Department of Financial and Professional Regulation will begin May 24 receiving new electronic surety bonds through Nationwide Multistate Licensing System (NMLS) specifically for exempt entity processor registration.

The exempt entity processor bond deals with rules laid out under Section 3-1 of the state’s Residential Mortgage License Act of 1987.

NMLS is the system of record for non-depository, financial services licensing or registration and does not grant or deny license authority.​ The main goal for the system, as stated on its website, is to improve national “coordination and information sharing between regulators, increased efficiencies for industry and enhanced consumer protection.”

Currently, the Illinois department also accepts two other company license bond types through NMLS: Residential Mortgage License and Exempt Company Registration.

  • Residential Mortgage License:
    • Illinois requires this license for any person or entity that engages in the business of brokering, funding, originating, servicing or purchasing residential mortgage loans on residential real estate.
    • The state requires a surety bond of $25,000 minimum for all licenses or $100,000 minimum fidelity bond for mortgage bankers and mortgage brokers without Illinois offices.
  • Exempt Company Registration:
    • This registration is available for any company in that employs Illinois-licensed mortgage loan originators, but is not required to be licensed as an Illinois Residential Mortgage Licensee under state laws of Illinois.
    • The surety bond is set for each licensed mortgage broker and mortgage banker and registered exempt company. The bond amount ranges from $25,000 to $150,000 and is based on Illinois residential mortgage loans brokered, funded, originated, serviced or purchased during the previous calendar year.

TENNESSEE — The Department of Financial Institutions will begin June 1 receiving electronic surety bonds though NMLS for five different license types: Industrial Loan and Thrift Registration, Money Transmitter, Flexible Credit, Mortgage and Title Pledge Lender.

The conversion deadline is Dec. 31 for both Illinois’ and Tennessee’s new electronic surety bonds.

  • Industrial Loan and Thrift Registration:
    • Tennessee defines an “industrial loan and thrift company” as someone engaged in the business of making loans and imposing the interest and loan charges, including persons engaged in business as endorsement companies.”
    • The state requires a one year $50,000 surety bond for a minimum term of 3 years. If the applicant makes or plans to make residential mortgage loans, the bond will be $200,000.
  • Money Transmitter License:
    • Tennessee defines money transmission as the sale or distribution of payment instruments or engaging in the business of receiving money for transmission or transmitting money by any and all means. Any money transmitter that provides services to state residents must be licensed in the state (with a few exemptions).
    • Each application requires a $50,000 surety bond or an irrevocable letter of credit. If the applicant plans to do business at more than one location, the amount required will increase by $10,000 per additional location, up to $800,000.
  • Flexible Credit License:
    • Tennessee defines a flex loan as a loan following a written agreement between a licensee and a customer establishing an open-end credit plan under which the licensee contemplates repeated noncommercial loans for personal, family or household purposes.
    • The state requires a $25,000 bond for each location, up to $200,000.
  • Mortgage License:
    • Tennessee requires the license of any mortgage lender, mortgage loan broker and/or mortgage loan servicer.
    • The state requires a $90,000 bond for a broker or $200,000 for a lender. A servicer who chooses to broker and lend and/or service loans are only required to carry the bond amount of $200,000.
  • Title Pledge Lender License:
    • The state defines title pledge lender as “any person engaged in the business of making title pledge agreements or property pledge agreements with pledgers.”
    • Bond amount varies.

All information regarding definitions of specific licenses was taken from the NMLS Resource Center. Other information on license types, bond forms and more an be found on the ESB Adoption Map and Table.

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