I say no, but we can refer them if we give affiliated business arrangement disclosure.

But, the section about "representing the lenders interest" confuses me.

bump...

I would like to know this too.

I have searched the threads, and found where David said "NO", but gave no site for his opinion.

If we are not allowed to require the use of an affiliated Title company, then why does the approved RESPA model form for "Affiliated Business Arrangement Disclosure Statement Notice" have an option"B"?


This is to give you notice that [ referring party ] has a business relationship with [ settlement services provider(s) ]. [Describe the nature of the relationship between the referring party and the provider(s), including percentage of ownership interest, if applicable.] Because of this relationship, this referral may provide [ referring party ] a financial or other benefit.


[B.] Set forth below is the estimated charge or range of charges for the settlement services of an attorney, credit reporting agency, or real estate appraiser that we, as your lender, will require you to use, as a condition of your loan on this property, to represent our interests in the transaction.

Original Anon here: This is what I got from a consultant:

RESPA only allows you to have an affiliated party as a required provider if the service provided by that provider is a legal service, a credit reporting service, or an appraisal service. No other types of affiliated party provided services can be mandated as required providers without violating RESPA 's rules. So since your title company will be providing services other than those three delineated types of services, you can recommend that the customer use your affiliate, buy you can not require that they use the affiliate. And at the time you make the recommendation, you have to provide the consumer with an affiliated business disclosure document describing the relationship and the pricing of those services and the fact that their use of the affiliate is optional.

(Second Anon here)

How is Title services not conisdered "Legal"?

Well, I guess it's a fine line there. My thought was that since we're buying title insurance, that is not necessarily a legal service (such as an attorney representing us to close a loan). Yes it has legal implications, but...any gurus want to comment?

And I should clarify a little: We have an attorney in our town who recently joined our BOD. He is a partner of the law firm we required to be used for ur RESPA loans. We don't allow the use of other attornys/title companies in our town.

So, 1, I need to disclose this relationship on an Affiliated Business Arrangement Disclosure , and I would think I would need to disclose under "B", cause we don't allow the customer to shop for this service.

I'll let the gurus chime in, but I believe thou shalt not require the use of affiliated title insurance company. Based on what I've been told, you could require the use of your attorney for closing purposes, preparing docs, etc. But the actual purchase of title insurance would be a potential Section 8 problem. Gurus???

Not a Guru (by a long shot)

However are we refering to this

Section 9: Seller required title insurance
Section 9 of RESPA prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/ramh/res/respamor#HE2

That would be good enough for me Ed.

Requiring the use of a particular provider has never been allowed with very limited exceptions.

From the same site:

An Affiliated Business Arrangement (AfBA) Disclosure is required whenever a settlement service provider involved in a RESPA covered transaction refers the consumer to a provider with whom the referring party has an ownership or other beneficial interest.

The referring party must give the AfBA disclosure to the consumer at or prior to the time of referral. The disclosure must describe the business arrangement that exists between the two providers and give the borrower an estimate of the second provider's charges.

Except in cases where a lender refers a borrower to an attorney, credit reporting agency or real estate appraiser to represent the lender's interest in the transaction, the referring party may not require the consumer to use the particular provider being referred.