Why Mortgage Bankers Should Have Blanket Bonds

The mortgage industry is gearing itself up to be more mobile-, user- and tech-friendly, offering consumers brand new ways to invest in property and navigate the financial specifics. But this poses many risks not only for the general public, but the banks and bankers working with them to buy or sell homes, for example.

This past year saw a major increase in awareness around cyber-attacks on banks of any size. From major global institutions to small local banks down the street, cyber hackers are looking at every bank as a target and finding new, sophisticated ways to get what they want. But the risks aren’t just posed from the outside as inside jobs are becoming more common as well. This has made it even more important for bankers to invest in the right bank crime insurance to protect their assets and reputation against allegations of committing crimes against the bank they work for.

The Importance of Bonds from the Inside

Financial institution bonds are a necessity for banks and credit unions, and are designed to provide a broad level of protection. One of those bonds is blanket bond coverage or Fidelity bond. Given their complex outline, it’s best to go over the specifics as to why it would benefit mortgage bankers to look into this kind of bank crime insurance.

Blanket bond insurance for mortgage bankers protects against fraud, wire theft and forgery, and covers all employees who use it. While outside threats, like cyber hackers, are always important to keep at bay, it’s even more important to protect against what goes on inside a bank, such as employee theft or fraud. Banks of all sizes and types need to understand the importance of having some form of bank crime insurance. Blanket bond insurance is a regulatory requirement for banks, and a good piece of coverage to have in line.

Understanding the Risks

Going on without blanket bond insurance can open bankers and their institutions up to hefty financial fees in the wake of a crime of any type, especially one that takes place because a dishonest employee committed a crime. Blanket bond insurance is specially designed to protect mortgage bankers against losses of any money, securities or other physical properties sustained as a result of dishonest acts. This makes it a first-party-type coverage, which protects an institution, not the shareholders.

Here are some risks covered under the insurance:

  • Forgery or fraudulent alteration of checks, bills, drafts, money orders, etc.
  • Loss of or damage to office and contents (i.e. furnishings, equipment)
  • Loss or damage to ATM’s and cash in the ATM’s
  • Ransom or extortion

On the other hand, if an employee commits a fraudulent act to make the bank they work for appear healthier, such as “cooking the books,” then this kind of coverage is exempt. This kind of bank crime insurance only works when an employee commits a crime to hurt a bank and take something from them.

Regardless of the kind of crime, be it inside or outside, having bank crime insurance in place will protect a mortgage banker against the possibly costly undertaking of being accused of any type of crime.

About Financial Guaranty Insurance Brokers

Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for entities of all types. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (626) 793-3330 to speak with one of our professionals.