Bank and a law firm are forming a partnership called, let's say State Title LLC. Bank owns 50% and law firm 50%.

A title company serves as the insurance carrier and will be paid 30% commission. State Title LLC will be paid 70% and will be paid 100% of all binder fees.

Does this sound reasonable from a RESPA standpoint?

1. The proper Affiliated Business Arrangement Disclosure must be given, 2. The bank cannot require the use of the particular title insurance agency, 3. The bank can only receive any fee that is based upon its ownership interest in the corporation, such as dividends.

Regarding

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3. The bank can only receive any fee that is based upon its ownership interest in the corporation, such as dividends

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Profits & losses will be equally divided between the bank and the law firm. Would this meet that test and is that RESPA requirement?

Yes, that would meet the test as the bank and the law firm own equal interests.

Roger - you should, if you haven't already, consider registering for the RESPA Section 8 Webinar to be presented this Wednesday. (See the big blue ad to the left.)

Thanks for the comments.

Don't forget that the title insurance premium should only be shared with those that provide "core title services" or other legit services.