Under Delaware Regulation 2401, to whom does an MLO surety bond run and for whose benefit?
Correct Answer
D) To the State for the benefit of the Office of the State Bank Commissioner and consumers injured by covered wrongful acts
Delaware Regulation 2401 requires the bond to run to the State for the benefit of the Office of the State Bank Commissioner and consumers injured by covered wrongful acts, omissions, defaults, fraud, or misrepresentation.
Why This Is the Correct Answer
Delaware Regulation 2401 requires the bond to run to the State for the benefit of the Office of the State Bank Commissioner and consumers injured by covered wrongful acts, omissions, defaults, fraud, or misrepresentation.
Why the Other Options Are Wrong
Option A: Only to the MLO’s employer for payroll losses
The Delaware bond is not solely an employer payroll-loss bond.
Option B: Only to third-party service providers and business creditors
The regulation excludes business creditors, third-party service providers, agents, and employees from the compensation category described.
Option C: Only to the lender funding the loan
The bond does not run only to the funding lender.
Memory Technique
DE-C013 -> Delaware-surety-bond
Exam Tip
The Delaware MLO bond protects the Office and injured consumers, not ordinary business creditors.
Common Mistakes to Avoid
- -Importing another state requirement into Delaware
- -Confusing NMLS baseline requirements with Delaware-specific rules
- -Treating operational assumptions as legal authority
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