Issue:Bank has a mortgage dept which does mortgs for themselves and sister affiliated banks, who don't have mort. depts. Loans processed and closed by bank, but booked on affiliate books. (Yes, there is a service level agreement). Question: (1)are affiliate employees required to give the ABD whenever their customer asks if they do mortgages, saying no, they will refer them to bank who does; or (2)can the mortg,dept.gives the ABD at the time of application, or no later than 3 days after application.

RESPA 3500.15, section B 1.i. says the ABD must be "given at the time of referral or Where a lender makes the referral to a borrower, the condition contained in paragraph (b)(1) of this section may be satisfied at the time that the good faith estimate or a statement under Sec. 3500.7(d) is provided;

One compliance group interprets this to mean even if a customer merely asks about a mortgage and told about the bank who does them, this requires an ABD there and then to the customer, which must be signed.

Other compliance group interprets it can be given with the app and not every time a customer merely asks an affiliate employee if they have mortgages and told they are handled by their affiliate.

Anyone clear the fog on this? Thanks.

I have always applied this (and seen it applied by others) as the ABD being triggered when an actual referral takes place, not just answering a question.

In Sec. 3500.15 (b)(1) it states:

"The person making each referral has provided to each person whose business is referred a written disclosure.."

When answering a question, you have not referred the person's business to anyone.

In theory I agree. However I have seen in the past where the person answering the question will fill out a referral sheet and send it to the affiliate just in case the customer applies for the mortgage. In that case I most definitely say the AfBA disclosure is required, if for no other reason there is a "referral" paper trail whether a referral was actually made or not. IOWs as the old saying goes you can't have your cake and eat it to.




The section applies to the lender making the referral. IOWs if you are processing the mortgage request and you are referring the applicant to an affiliate for settlement services, such as homeowners insurance, you can send the AfBA disclosure with the GFE. This does not mean if you refer the customer to a mortgage lender that the AfBA disclosure for your referral can be sent with their GFE. If you are not the lender then you must provide the AfBA disclosure at the time the referral is made.

Thank you for your replies--because the loan is being booked on the affiliates books, not the bank where the mortgage dept is located, I would question this is a true referral. The bank/Mort. dept receives a fee from the affiliate for doing their processing, closing, etc. but loan is booked on the affiliates books.

Sounds to me you are acting as a loan broker and you need to be following all the appropriate disclosure requirements.