My bank is under new ownership, so I've been pouring through the various definitions of "affiliate" under Reg O, Reg Z, Reg W and RESPA. The RESPA definition is causing me some consternation due to some common ownership / control on the holding company.

ABC Bank is considering a mortgage referral relationship (under HUD's policies, of course) to XYZ Bank.

ABC Bank is 100% owned by 123 Holdings.
123 Holdings is 57% owned by Jim Smith

XYZ Bank is 100% owned by 789 Holdings.
789 Holdings is 68% owned by Jim Smith.

Jim Smith is on the board of ABC Bank, 123 Holdings, and 789 Holdings but is not on the board of XYZ Bank.

Is XYZ considered an "Affiliate" under RESPA? When I read the definition of "Affiliate" and "control" in RESPA it sure seems to me like they would be considered an affiliate. Thoughts??

Look to section 2602 of the Act itself for the definition of an affiliate and an associate if you haven't already.

JIm Smith has controlling interest in the holding companies that own 100% of ABC & XYZ. Seems to me he has control so I would agree with your assessment.

Thanks Dan - That's kind of where my train of thought was leading me.

It stands to reason, then, that if Jim Smith's connection alone causes XYZ to be an Affiliate under RESPA, that an Affiliated Business Arrangement disclosure would be required.

Two scenarios we were contemplating (either a referral to XYZ or a scary "desk rental" situation) would not result in any income being allowed to be paid to ABC Bank due to the prohibition of payments for referral services to affiliates.

Right? (oddly enough, this is what I love about compliance - the nuance!)