Mortgage Broker Bonds

Written by Michael O'Brien
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For home loan organizations, mortgage broker bonds are a legal necessity. The purchase of a property is a major investment. When someone buys a home, the condition and status of that property must be made clear to the buyer. Should the unexpected become a source of expense, it's important that such problems be settled fairly in order to protect the consumer.

Mortgage Broker Bonds: Safer Property Buying

Let's say you've just bought a home and there turns out to be an unforeseen problem. Perhaps the plumbing is old and needs to be replaced. Perhaps a zoning regulation is being enforced and property alterations need to be made. This is going to cost money. Given the huge investment that's been made already in buying the home, this expense is the last thing you need. This is where mortgage broker bonds come in.

Mortgage broker bonds exist to protect the consumer. If a property has a problem that was not caused by the owners that the people selling the house should have known about, then that needs to be either made clear to the new owners (in a "sold as is" type of situation), or the mortgage company needs to make proper reparations and not hold the new property owner responsible for such costs.

Appraisal Issues

All of these problems have chiefly to do with appraisal issues. An appraisal is meant to assess the status of a property so that prospective buyers are being given an accurate account of what they're buying into. This can apply to the selling price of a home as well. A bad appraisal can cost someone in the long run. Again, broker bonds ensure the costs of such issues are absorbed by the surety company issuing the bond, not the buyer.

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