On September 12, 2016, NMLS began receiving and tracking Electronic Surety Bonds (ESB) through the System. Currently, eight states have publicly announced adoption of ESB in 2016, with additional states planning to announce soon. See the ESB Adoption Map and Table for a list of those agencies and the required transition dates.
Background – Many state laws and regulations require financial services licensees to obtain a surety bond as a condition of licensure. State regulators or consumers can file claims against a surety bond to cover fines or penalties assessed or provide restitution to consumers due to failure of a licensee to comply with licensing or regulatory requirements.
In addition, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) requires applicants to meet “…either a net worth or surety bond requirement…” Currently 48 state agencies require mortgage loan originators (MLOs) to either have their own surety bond or be covered under a company’s surety bond in order to originate mortgages. 177 license authorities managed on NMLS require the company to obtain and maintain a surety bond as a condition of licensure.
Currently, NMLS functionality is limited to the uploading of a surety bond document. The current hard copy requirement is outdated and will be transformed to a fully electronic process that will provide efficiencies for industry and certainty for regulators starting with the System update in September 2016.