I have a corporation that owns two subsidiaries, the bank and a mortgage broker business. The bank will close the Note in its name and fund the mortgages it originates. The Bank will charge the borrower an origination fee. The bank intends to forward the loan application to its mortgage broker affiliate to process the application (create the early disclosures, order the appraisal, order the flood determination, create the closing documents, etc.) of which there will be a separate fee to the affiliate charged to the borrower. The Bank intends to collect servicing release fees or yield spread premiums after the loan is sold into the closed. The corporation intends to peel away a pre-arranged percentage of the bankâ€™s origination fee on each loan as income after each loan closes.
I believe there should be an Affiliated Business Arrangement Disclosure Statement from the bank to applicants regarding the mortgage broker affiliateâ€™s application. My main concern is regarding Section 8 and the impact of the affiliate relationships. Ordinarily, I would be alarmed if the bank was doing enough work to justify its fee, since the mortgage broker business is doing so much of the processing. Would you please let me know if my concern if justified, if the affiliate relationship makes a difference? Also, would the plan of the parent corporation have any impact within RESPA as to Section 8 either, or if there is an exemption if it qualifies as a return on an ownership interest or franchise relationship?