§ 8604 Lender Bond Acceptance Rules

• •If a bank asks for a payment bond (a promise to pay) before giving a loan for a construction project, they can't later say the bond is no good if it's from a real insurance company.
• •The bank must accept the bond in writing first. After that, they can't change their mind and refuse the loan because of the bond.
• •This rule applies to banks, credit unions, and other places that give out loans.

You want to build a house and need a loan from the bank. The bank says, 'We'll give you the money only if you get a payment bond.' You get the bond from a real insurance company, and the bank writes a letter saying it's okay. Later, the bank can't say, 'Actually, we don't like this bond,' and refuse to give you the loan.

The bank already agreed the bond was good, so they have to stick to their word and give you the loan.