Audied and may be fined $30k plus

[mapiye]

We are in the process of being audited and may be fined 30k plus. We have a 50 k bond with the state of Georgia.

Questions

1) Does the Department of Banking and Finance usually collect from the bond
2) If they do collect from the bond what can the bond company do to force you to pay?
3) Can bond company typically levy your personal assets of which we dont have much since the mtg industry sucks
4) Can bond company place lien on your primary residence or place judgement on credit.

Mitch

[Admin]

1) Only if it is something that the bond guaranteed. You may want to have your attorney review the bond form and the state statutes it lists.

2) More than likely you signed an indemnity agreement stating that the surety is held harmless in the event of a claim.

3) Indemnity agreements usually require you to not only corporately guarantee the bonding companies assets, but also personally. So more than likely, yes. However, you will need to refer to your agreement with the surety to make sure.

4) I am sure they could, as the indemity agreement states that you agree to pay all claims and the associated legal fees. However, the bonding company may or may not decide to do so, depending on whether or not it makes sense for them to do so financially.



Let me know if you have any additional questions!

[rolf]

this is kind of the situation i was referring to in my other thread. minus that the OP is continuing in the business i am assuming??)

but, what if he were not?? that's a good question he asks, and it's something that i don't think a lot of people considered when they got into the business. if you have left the industry for another, which a lot of people have done, and many more will do, what happens in an audit that goes badly (as the one above did?)

[Admin]

It depends on when the bond is in force until. Some bonds have tails on them that allow for claims to arise years after expiration. You will need to read the bond language to find out for certain.