Couldn't find a similar match for this question, I'm pushing back on an opinion regarding 1007.104(i). Small Bank and Big Bank are affiliates under the same holding company. Small Bank mortgage lenders send consumers who look like they're going to qualify to an MLO in Big Bank's secondary market unit, who handles the application, disclosures, underwriting, etc. Like Big Bank's process with their own branches, they might shoot the loan docs to Small Bank for signing. If the loan closes, it goes on Big Bank's books (then to an investor or GME).

Even if this arrangement is informal, is Big Bank technically serving as a third-party service provider (i.e., a broker) for Small Bank?

If all you are doing to sending the customers over to the big bank, I don't see a broker arrangement. You would have to be providing a RESPA Affiliated Business disclosure at the time of referral. Why do you have mortgage lenders, if all you do is send them to the Big Bank?

If they don't qualify for whatever reason, the applicants come 'home' to Small Bank where they have a chance to be approved for that same mortgage.

thanks, I win a small wager! Enjoy the weekend.

Well, that sounds like you are referring the customer to the Big Bank and then the Big Bank is then brokering the loan back to the Small Bank and not the other way around. I think you need to sit down with your legal counsel and get this all sorted out.

If Big Bank's unit denies the loan, then it starts all over again with Small Bank as a new app, new disclosures, probably new terms. They don't send that same application back. That's the rest of the scenario.