Surety Bond Associates

SB 2913 would subject mobility dealers to the existing licensing and bond requirements for motor vehicle dealers. Mobility dealers are those who sell more than five mobility vehicles in a year. Such vehicles are specially equipped to transport a person with a disability and include mechanical devices such as wheel chair lifts or ramps. Current law requires motor vehicle dealers to post a $10,000 bond if they sold less than 200 vehicles in a calendar year, and a $25,000 bond is required if the dealer sells more than 200 vehicles in a calendar year.

SB 708 would require debt settlement service providers to be licensed and post a $200,000 surety bond conditioned on the licensee’s compliance with the proposed law. The bond would secure the payment of any funds owed to persons damaged by the provider s noncompliance with the law or any funds owed to the State for violations. An insurer authorized to do business in the State would have to issue the bond.

SB 741/HB 1022 would require debt settlement service providers to register and obtain a $50,000 surety bond. The bond would have to be issued by a surety company authorized to do business in the State. The bond would be conditioned on compliance with the applicable state and federal laws and regulations. Both chambers passed a bill and later passed a conference committee report containing these bonding provisions.

SB 42 bill pending would require mortgage loan modification service providers (service provider) to register and post a $100,000 surety bond. The bond would run to the State for the benefit of the Attorney General and any consumer suffering damages as a result of the service provider s wrongful act, omission, default, fraud or misrepresentation committed in the course of business.

SB 1110 would revise the existing licensing laws for mortgage lenders, brokers and originators. Existing law requires a minimum $40,000 surety bond. The law requires the bond amount to reflect the licensee’s loan origination volume and is to be set by regulations. Instead, the bill would require mortgage lenders and correspondent mortgage lenders to post a minimum $100,000 surety bond mortgage brokers would have to post a minimum $50,000 bond. The initial bond would be for the licensee’s initial license for the main office. The licensee would have to obtain a bond that covers all loan originators that the licensee sponsors at all locations.

SB 392 requires contractors organized as limited liability companies (LLCs) to post a $100,000 bond as a condition of an LLC business license. The bond is for the benefit of any employee damaged by his or her employer’s failure to pay wages, interest on wages or fringe benefits. Further, if the licensee is a party to a collective bargaining agreement, the bond must cover welfare fund contributions, pension fund contributions and apprentice program contributions. The new law exempts qualifying individuals from the contractor license bond requirements if the individual held a 10% membership interest in a limited liability partnership. Current law requires a surety bond in the amount of $12,500 for contractors.

AB 359 would regulate foreclosure consultants. The bill would require such consultants to post a surety bond in the amount that the Director of the Division of Consumer Affairs prescribed by regulations. Such consultants would not include banks, savings banks, savings and loan associations, credit unions or other federally insured financial institutions or insurance companies. Also exempted would be those licensed under the “New Jersey Licensed Lenders Act,” and those licensed as a real estate broker, broker salesperson or salesperson. The bill now has passed the Assembly and has been sent to the Senate Commerce Committee.

HB 549 would require debt adjustment service providers to be licensed and post a surety bond from a bonding or insurance company authorized to do business in the State. The bond would have to be in the amount that the Director of Commerce will determine based on the licensee’s financial condition, experience and risk to consumers, among other factors. The bond could not be less than $10,000 or more than $50,000. The bond would be concurrent with the license term. It would have to be for the exclusive benefit of an individual harmed by the licensee’s failure to comply with the law.

New legislation would reduce the license bond required for used motor vehicle dealers from $50,000 to $20,000.

New legislation was recently introduced that would require debt collection agencies to be licensed and post a surety bond, contract of indemnity, or an irrevocable letter of credit that must be payable to the people of New York. The bond amount would be based on the number of persons employed by the licensee. A $10,000 bond would be required for one to four employees; a $25,000 bond for five to nine employees; a $50,000 bond for 10 to 20 employees, and a $75,000 bond for 20 or more employees. The bond would secure the licensee’s compliance with the applicable law and the payment of all costs and penalties. The surety’s total liability would be limited to the face amount of the bond, regardless of the number or nature of claims made against the bond or the number of years the bond remained in force.