Texas Mortgage Company Bond
Search “Texas mortgage company bond” and you land in the wrong place half the time, because Texas splits the obligation by what you do with the loan. If you originate or broker loans as a Chapter 156 mortgage company, you fund the state Recovery Fund — not a surety bond. If you service Texas residential mortgage loans, you register under Chapter 158 with the Department of Savings and Mortgage Lending and file a $25,000 or $50,000 surety bond. This page is the servicer bond, sized to your Texas volume and filed to the exact figure SML requires.
“Mortgage company bond” in Texas is two different obligations
Most pages ranking for this term quietly treat originating and servicing as the same thing. They are not. Texas regulates the two activities under different chapters of the Finance Code, and each gets a different consumer-protection mechanism. The single most common mistake is a servicer buying nothing because they assume the Recovery Fund covers them — or an originator buying a bond they do not need. Here is the clean split:
Originate vs. service: two Texas obligations, one confusing search term
Which Finance Code chapter applies — and whether a surety bond is even part of it
| Mortgage company / originator | Residential mortgage loan servicer | |
|---|---|---|
| What you do with the loan | Originate / broker the loan | Service the loan (collect & remit payments) |
| Governing chapter | Finance Code Ch. 156 / 157 | Finance Code Ch. 158 |
| Consumer-protection mechanism | Recovery Fund contribution | Surety bond filed with SML |
| Surety bond required? | No separate servicer bond | Yes — $25,000 or $50,000 |
| Recovery Fund coverage | Yes (Ch. 156 fund) | No — servicers carved out by §158.055(f) |
Chapter 156/157 mortgage companies satisfy consumer protection through the Recovery Fund; only Chapter 158 servicers file a surety bond with SML.
Tex. Fin. Code Ch. 156, 157 & 158; §158.055(f) (Recovery Fund carve-out for servicers).
If you originate loans and want the originator side, start with our guide to becoming a mortgage broker and the state-by-state mortgage bond requirements. Everything below is the Chapter 158 servicer bond.
One narrow exception on the originator side: a mortgage company registered as a financial services company (RFSC) under Fin. Code §156.205(b) files a separate $1,000,000 bond instead of relying on the Recovery Fund — see the full Texas surety bond directory for that bond and every other Texas license, tax, and court bond type.
Who has to register as a Texas mortgage loan servicer
Under Tex. Fin. Code §158.051, a person may not act as a residential mortgage loan servicer — directly or indirectly — for a loan secured by a lien on Texas residential real estate unless registered with SML or exempt. A “servicer” (§158.002) is anyone who receives scheduled borrower payments, including escrow, and remits principal and interest to the loan owner or a third party. Hold servicing rights but subcontract to a subservicer? You still register (7 TAC §58.100(c)).
You register (and bond) if you
- Collect scheduled payments on Texas residential mortgage loans
- Remit principal, interest, and escrow to the loan owner
- Hold master-servicing rights but use a subservicer
- Service at least one Texas-secured residential mortgage loan
You are exempt if you are (§158.052)
- A depository institution or its subsidiary/affiliate
- Already registered under Chapter 157
- Licensed under Ch. 342 / regulated under Ch. 343 and not servicing first-lien loans
- Servicing loans made with your own funds or your own seller financing
How SML sizes your servicer bond: $25,000 or $50,000
The penal sum is not a flat number and it is not based on your company size — it is based on the unpaid principal balance (UPB) of the Texas residential mortgage loans you service. 7 TAC §58.107(e) sets the minimum from that Texas UPB, measured as of October 31 of the year before your registration year. Finance Code §158.055 caps the amount SML can require at $200,000.
Texas residential mortgage loan servicer bond amounts
Minimum penal sum by Texas-secured unpaid principal balance
New applicant
$25,000
First-time registrant, or lapsed 12+ months — the statutory floor.
Texas UPB ≤ $25M
$25,000
Total Texas-secured unpaid principal balance at or below $25 million.
Texas UPB > $25M
$50,000
Texas-secured unpaid principal balance above $25 million.
Unimproved / foreclosed only
$25,000
Servicing only unimproved land or foreclosed homes — flat, any volume.
7 Tex. Admin. Code §58.107(e). Amount set from Texas UPB as of Oct. 31 of the preceding year; statutory ceiling $200,000 (Tex. Fin. Code §158.055).
Because the bond is a fixed statutory amount rather than a priced product, your premium turns on the usual underwriting factors — credit and business financials. Our guide to how surety bond cost is determined walks through what carriers weigh, and the mortgage bond cost calculator gives you a working estimate.
The October 31 measuring date and the year-end recalculation
This is the operational detail that catches growing servicers. The bond must stay active for the entire life of the registration (7 TAC §58.107(f)), and you have to recalculate the required minimum before you request renewal during the November 1–December 31 renewal window. Cross from the $25,000 tier into the $50,000 tier, and the increased bond has to be active before SML will renew you.
Oct 31 — measure
Your Texas UPB is snapshotted as of October 31 of the year before the registration year. That figure, not your national book, decides the tier.
Nov 1–Dec 31 — recalculate
During the renewal window you recalculate the minimum. Still under $25M in Texas UPB? Stay at $25,000. Over it? Move to $50,000.
Before renewal — file the increase
A higher tier means the larger bond must be in force before SML renews. Miss it and your registration does not renew — treat it as a hard deadline.
The Recovery Fund myth: your servicer bond does not buy fund coverage
Several national bond sellers claim the Texas servicer bond carries Recovery Fund protection. It does not. Finance Code §158.055(f) writes the Chapter 158 bond procedures specifically to exclude loan servicers from the Recovery Fund. That fund exists under Chapter 156 for mortgage company and loan originator customers — not for servicer registrants.
Why it matters to you: for a servicer, the bond is the consumer remedy. There is no second layer behind it, which is exactly why SML insists the bond stay continuously in force and why a lapse is treated so seriously. If you were counting on fund coverage, you were counting on something the statute removed.
How a claim actually works against a Texas servicer bond
A borrower does not simply sue your surety. The claim path runs through SML's complaint and order process under Finance Code §§158.055(d)-(e) and §§158.102-158.103:
A consumer complaint leads to a final Commissioner order
SML investigates and, where warranted, issues a final order directing what the registrant owes the consumer.
The Commissioner claims on the bond
If the registrant fails to comply with that final order, the Commissioner may make a claim on the bond to recover and pay the consumer the amount the order entitled them to.
SML can require a new bond
Once an action is commenced against the bond, the Commissioner may require the registrant to file a new bond.
You replace the bond immediately on any recovery
The registrant must file a replacement bond immediately upon any recovery, so the coverage never drops below the required amount.
The bond protects the consumer, not your balance sheet. Anything the surety pays comes back to you under your indemnity agreement, and a paid claim makes the bond far harder to replace. Our guide on how to avoid a surety bond claim covers the servicing practices that keep complaints from becoming orders.
Registering with SML, step by step
File the sworn application
Submit the written, sworn application SML prescribes (§158.053), including your business address and the name, title, and address of the person authorized to respond to complaints. The registration application fee is capped by statute at $500.
Determine your bond tier
Pull your Texas UPB as of October 31 and read the 7 TAC §58.107(e) table: $25,000 up to $25M, $50,000 above it, and $25,000 flat for unimproved-land / foreclosed-only servicers.
Get the bond written and filed electronically through NMLS
Since January 1, 2026, SML requires the servicer bond to be an electronic surety bond (ESB) filed through NMLS rather than a paper bond (7 TAC §58.107(b)). The surety issues the SML-accepted Residential Mortgage Loan Servicer Bond for the precise penal sum and files it electronically; servicers still on a paper bond convert at renewal. We shop it across Treasury-certified carriers.
File the bond before approval — and keep it continuous
Under §158.055, the bond must be on file before registration is approved and stay in force the entire time you are registered. Recalculate and increase it at renewal when your tier changes.
Know your Texas UPB tier? We'll issue the SML bond form to the exact amount and get it on file.
Start a Texas servicer bond quoteOfficial Texas Requirements
"Before an application for registration is approved and while registered, an applicant must file with the commissioner a surety bond. The bond may not exceed $200,000, except that a servicer of only unimproved residential real estate or foreclosed property with a dwelling, with annual property sales not exceeding $1 million, is capped at $25,000."Texas Legislature — Finance Code (Residential Mortgage Loan Servicers) • Tex. Fin. Code §158.055
Related Texas and mortgage bonds
Where Texas servicers and mortgage professionals usually go next:
Not sure whether you originate or service? Read the mortgage bond requirements guide before you apply, or browse the full bond catalog.
Common questions from Texas mortgage servicers
Is there really a "Texas mortgage company bond," or is that the servicer bond?
The phrase "Texas mortgage company bond" gets searched by two different licensees who need two different things. If you originate or broker residential mortgage loans as a Chapter 156 mortgage company, your consumer-protection obligation is funding the state Recovery Fund — not filing a surety bond. If you service Texas residential mortgage loans, you register under Chapter 158 with the Department of Savings and Mortgage Lending (SML) and you do file a surety bond, sized at $25,000 or $50,000. This page is about the servicer bond. Confirm which activity your license actually covers before you buy anything.
When is my Texas servicer bond $25,000 versus $50,000?
The amount tracks the unpaid principal balance (UPB) of the Texas-secured residential mortgage loans you service, measured as of October 31 of the year before your registration year (7 TAC §58.107). New applicants who have never registered start at the $25,000 minimum. If your Texas UPB is $25 million or less, the minimum is $25,000; if it exceeds $25 million, the minimum is $50,000. A servicer handling only unimproved land or foreclosed properties with a dwelling files a flat $25,000 regardless of volume. Finance Code §158.055 caps the amount SML can demand at $200,000.
Does the servicer bond give my borrowers Recovery Fund protection?
No — and this is a point several bond sellers get wrong. Finance Code §158.055(f) specifically writes the Chapter 158 bond procedures to EXCLUDE loan servicers from the Recovery Fund that Chapter 156 established for mortgage company and loan originator customers. Your servicer bond is the consumer remedy; there is no Recovery Fund layer behind it. That is exactly why SML requires the bond to stay continuously in force for the life of your registration.
Who is exempt from registering as a Texas mortgage loan servicer?
Under Finance Code §158.052, registration is not required for federal or state depository institutions and their subsidiaries and affiliates; a person already registered under Chapter 157 (mortgage bankers and originators); a person licensed under Chapter 342 or regulated under Chapter 343 who does not service first-lien loans; and a person servicing a loan made with their own funds or as seller financing on property they sold. Separately, §158.055(h) exempts a third-party debt collector that does not own the loans it services and has already filed a bond under Chapter 392.
What actually triggers a claim against a Texas servicer bond?
Claims do not run as a direct borrower lawsuit against the surety. Under Finance Code §158.055(d)-(e), if a registrant fails to comply with a final Commissioner order, the Commissioner may make a claim on the bond to pay the consumer what the order entitled them to. Once an action is commenced against the bond, SML can require a new bond, and you must file a replacement immediately upon any recovery so coverage never lapses. The bond protects consumers; you remain liable to the surety for anything it pays under your indemnity agreement.
When do I recalculate and increase the bond?
Every renewal. Under 7 TAC §58.107(f) the bond must stay active for the entire registration, and you recalculate the required minimum before requesting renewal during the November 1–December 31 renewal window, using your October 31 UPB figure. If the recalculation pushes you from the $25,000 tier into the $50,000 tier, the higher bond must be active before SML will renew you. Treat a tier change like a filing deadline, not a formality.
Does my Texas servicer bond have to be an electronic surety bond?
Yes. Effective January 1, 2026, SML requires every residential mortgage loan servicer registrant to obtain and maintain the surety bond as an electronic surety bond (ESB) filed through NMLS rather than a paper bond (7 TAC §58.107(b)). If you are still carrying a paper bond, you convert it to an electronic bond at your next renewal. We issue the SML-accepted servicer bond form and handle the electronic filing through NMLS so the bond is on record before SML approves or renews your registration.
All content is researched from official state and federal sources (.gov) and verified before publication. BuySuretyBonds.com works with Treasury-certified, A-minimum rated surety carriers serving all 50 states.
General information, not legal, tax, or underwriting advice. Texas mortgage licensing categories, bond amounts, exemptions, and rules are set by the Texas Finance Code and the Finance Commission (7 TAC Ch. 58) and change over time. Confirm your current requirement with the Department of Savings and Mortgage Lending and request a quote for your specific bond form and amount.
File the right Texas bond — servicer, not originator
Tell us your Texas UPB tier and registration status. We'll confirm you actually need the Chapter 158 servicer bond, write it to the exact $25,000 or $50,000 penal sum, and get the SML form on file — free quote, no obligation.
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