Many professionals in the financial and real estate industries undergo their licensing procedure via the National Multistate Licensing System and Registry (NMLS). The NMLS handles the licensing data of numerous types of specialists such as mortgage brokers, originators and lenders, money transmitters, and collection agencies, among others. While the licensing bodies for different states and trades varies, all documents enter the NMLS databases.
The electronic surety bond (ESB) was introduced in 2016 as a method to streamline the collection of licensing information in the system. The electronic submission of surety bonds aims to make the collection, storage and scrutiny of the NMLS surety bond requirements easier and smoother.
State licensing bodies in nine states adopted the electronic surety bonds in 2016. In January 2017, 11 more states joined them. One more will follow in April 2017. Let’s take a look at the professionals in different states who are now required to use the electronic surety bond.
The volume of licensing information that the NMLS needs to handle is considerable. The choice to move to electronic surety bonds thus is a part of its efforts to better manage the data. The electronic submission aims to make the process faster and more secure and it does not affect the surety bond costs of licensees.
In 2016, the first nine states adopted the ESB system. They are Texas, Indiana, Wisconsin, Washington, Iowa, Vermont, Massachusetts, Wyoming and Idaho. In each state, a different set of professionals had to comply with the new rule and the change had different deadlines.
As of January 23, 2017, 11 more states moved to electronic surety bonds: Alaska, Montana, Illinois, North Dakota, South Dakota, Minnesota, Mississippi, Georgia, North Carolina, Rhode Island and Indiana (partially). Any new licensee after that date needs to submit the bond electronically. Businesses that currently hold a license in these states need to move to ESBs by the end of 2017.
Additionally, Oregon is about to join the new system as of April 15, 2017.
In each of the states that have adopted NMLS surety bond requirements, a different set of professionals have to comply with them. Below you can find a list of the 21 states and the various types of specialists who have to post ESBs in each.
You can also consult the State Adoption of ESBs Table by the NMLS to see the exact adoption dates for each state and specialist type.
How do you see the move to electronic surety bonds that the NMLS is undertaking? Please share your opinions in the comment section.
About the author: Vic Lance is the founder and president of Lance Surety Bond Associates. He is a surety bond expert who helps business owners get licensed and bonded. Vic graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan’s Ross School of Business.