by 
The Curious Bag
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A mortgage surety bond might be required for anyone seeking a license to do business as a mortgage broker. Each state has its own requirements for a mortgage surety bond.
Significance
A mortgage surety bond, also called a mortgage broker bond, is intended to provide assurance that the broker will abide by the mortgage laws of the state in which he is licensed.
Function
If the mortgage broker engages in lending practices that violate the state's law, anyone suffering monetary damages as a result of the broker's misconduct can obtain compensation from the bonding company, up to the amount of the bond.
Bond Amount
The mortgage bond required by any state will vary greatly, with some states requiring a bond as large as $1 million bond and others as little as $10,000. Six states do not require any bond: Alaska, California, Florida, Massachusetts, Oklahoma and Utah.
Separate Bonds
Because mortgage laws can vary significantly from one state to another, mortgage brokers wanting to do business in several states will have to post a separate bond in each state.
Consumer Protection
The mortgage surety bond requirement is a form of consumer protection. Before the broker can do business, the surety company checks her background and tests her financial viability before it bonds her.
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