Puerto Rico mortgage lending & servicing bonds.
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What the mortgage lending & servicing bond actually covers

Act No. 247 of December 30, 2010 — the Act to Regulate the Business of Mortgage Loans in Puerto Rico — requires every applicant for a license to engage in the mortgage lending business to post a bond answering for faithful compliance with the Act and OCIF’s rules (Art. 2.3, 7 L.P.R.A. § 3052b). The bond answers to any person, including OCIF, and is renewed annually. The Act’s definition of the mortgage lending business expressly includes mortgage loan servicing, so a servicer-only company needs the same bond.

The amount is set in Article 3.4 (7 L.P.R.A. § 3053c): a $500,000 bond if the applicant will do business from a single office, raised by $10,000 per additional office — so a three-office licensee files a $520,000 bond. The Commissioner may require a larger bond based on the applicant’s business volume and financial condition, and under Art. 2.6(d)(1) may order a new or supplemental bond within 30 days if it finds the bond inadequate or depleted.

OCIF’s own form, Bond 247-MORTGAGE LENDING-SERVICING, binds principal and surety to the Commonwealth of Puerto Rico for the use and benefit of the State and any claimant of the licensee, including OCIF. It is continuous until cancelled; the surety may cancel on 30 days’ written notice to the Commissioner by registered mail. Claims can be presented for five years after the bond ceases, and the bond must stay in force five years after the license is cancelled, revoked, surrendered, or not renewed.

Instead of a surety bond, Art. 2.3(b) also allows Puerto Rico government securities taken at 80% of market value, certificates of deposit, or letters of credit in favor of the Commissioner. A surety bond must come from an insurer authorized by Puerto Rico’s Insurance Commissioner. Because of the size of the bond and the five-year tail, it is underwritten on the licensee’s audited financials, capital, and liquidity.

You need this bond if you’re