The Over-Leveraged Co-Signer
A defendant, Marcus, is charged with felony residential burglary and faces a $75,000 surety bond. His aunt, Denise, offers to sign as indemnitor. She brings a pay stub showing $2,900/month net income, a mortgage statement with $1,340/month payment, a car note of $410/month, and a savings balance of $1,200. She owns a 2016 vehicle worth roughly $9,000 with a $6,500 lien. Denise says she 'can probably borrow' from her church if needed but has no written commitment. The agent's premium on a $75,000 bond at the statutory rate would be $7,500 if collected in full; Denise proposes $1,500 down and a signed promissory note for the remainder. Marcus has missed two prior court dates on a misdemeanor and has no verifiable employment.
1. Evaluate Denise's indemnitor capacity. What is the agent's realistic exposure if the bond is forfeited, and should the agent accept her as indemnitor?
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Compute net free cash flow: $2,900 − $1,340 − $410 = $1,150/month, before food, utilities, insurance, and incidentals - realistically near zero cushion. Net vehicle equity is about $9,000 − $6,500 = $2,500, and savings is $1,200, so liquidatable net worth is roughly $3,700 against a $75,000 exposure. The 'church loan' is unverified and cannot be underwritten. If forfeiture occurs, the agent/surety owes the penal sum of $75,000 (subject to any remission), and recovery from Denise would be a fraction of that. The $1,500 down plus an unsecured promissory note does not change the surety's liability to the court. Recommendation: decline her as sole indemnitor. Options: require a fully secured or additional indemnitor, reduce exposure by declining the bond, or require meaningful collateral. Do not treat the promissory note as protection - it is a collection tool, not collateral.
2. Marcus's two prior failures to appear on a misdemeanor - how should that affect underwriting, and what conditions are defensible?
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Prior FTAs are one of the strongest predictors of future non-appearance. They should raise the risk tier, not be waived by a larger down payment. Defensible conditions: verified collateral sufficient to cover the penal sum or a substantial portion; a co-indemnitor with independent net worth; check-in requirements; confirmation of a stable residence and phone; and candid disclosure to the defendant of the consequences of another FTA (forfeiture, bounty recovery, and the indemnitor's liability). The agent must not misrepresent the bond's terms to close the deal. If the risk cannot be adequately secured, the correct judgment is to decline - writing an unsecured $75,000 bond on this profile is a business and regulatory exposure the agent should not take.