NMLS recently announced that twelve additional state agencies (with 44 license types) would jump on the Electronic Surety Bond (ESB) bandwagon as of January 23, 2017. These additions bring the total number of agencies using ESB within NMLS to 21 (with 81 license types.) Jurisdictions that will begin using ESB for licensing in NMLS include Alaska, Georgia, Illinois, Indiana Secretary of State, Louisiana, Minnesota, Mississippi, Montana, North Carolina, North Dakota, Rhode Island and South Dakota. Licenses transitioning to ESB include not only traditional mortgage type licenses, but also other non-depository consumer finance-related licenses such as money transmitter, collection agency, consumer loan company, loan broker, payment instrument seller, check casher, pawnbroker, currency exchange provider, escrow provider and deferred deposit lender. To view the full list of adopting agencies and affected license types, visit the NMLS Resource center.

The majority of newly adopting agencies have announced that the ESB requirement will be mandatory for any new applications submitted as of the release date on January 23, 2017. Companies holding existing licenses generally will have until the end of the calendar year to coordinate the transition of their currently held paper bonds to ESBs with their surety providers. However, be sure to note the deadlines for specific license types as they apply to your company as there are some outliers.

While both industry and regulators are still fine tuning the ESB process, once a conversion is made for a jurisdiction from paper bonds to ESB there are benefits to be had. For example, as company name and address information is housed within NMLS, individual bond riders are no longer needed to correct typographical errors. Instead, any necessary updates are tied to amendments made directly within the NMLS record. In addition, any necessary bond signatures are processed electronically through NMLS, reducing delays with obtaining signatures on hard copies routed between the surety, the company and the regulatory agency. Finally, the ESB, with any revisions and all appropriate contact information, is historically available within the company’s NMLS record, reducing the likelihood that an interim bond rider is lost. Note that ESB conversion does not currently apply at the branch or individual level, unless the jurisdiction allows a blanket bond to be held at the corporate level that also covers branch locations and/or individual licensees.

NMLS has provided several training opportunities with respect to ESB for both surety producers and industry, several of which are available in a recorded format with links available on the NMLS Resource Center here. In addition, in-person training as well as break-out sessions regarding current ESB experiences will be available at the NMLS Annual Conference this February in Austin, Texas.

With the benefits of ESB, and as jurisdictions become more familiar with the process, look for additional jurisdictions to join the existing 21 on the ESB Bandwagon in the coming months.