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#2294606 - 03/11/24 03:53 PM Affiliated Business Agreement Disclosure
bcompliance Offline
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Joined: Sep 2014
Posts: 1,296
We recently added a realtor/broker to our board of directors. The individual has no ownership interest in the company they work for. Their compensation for being a board member is the same as everyone else's - paid per meeting. For transactions where the board member is the agent or broker, should we provide the affiliated business agreement disclosure in appendix D of RESPA (or should they)? https://www.consumerfinance.gov/rules-policy/regulations/1024/d/

If yes, does that need to be done on every loan where they are the realtor/broker or just in certain situations where a referral is made?
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RESPA
#2294612 - 03/11/24 04:46 PM Re: Affiliated Business Agreement Disclosure bcompliance
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,750
Galveston, TX
It would only be required if a referral was being made. I think it would be a little unusual for a lender to be referring borrowers to either a broker or a real estate agent. You also most likely have Reg O considerations if he is acting as a broker for a loan going through the bank since he has a financial interest in the loan.
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#2294628 - 03/11/24 08:00 PM Re: Affiliated Business Agreement Disclosure bcompliance
bcompliance Offline
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Joined: Sep 2014
Posts: 1,296
That's what I was thinking - would be a rare situation, if ever. You lost me on the Reg O piece. If the loan is not to the director and would be to an unrelated customer, how does Reg O come into play?
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#2294630 - 03/11/24 08:17 PM Re: Affiliated Business Agreement Disclosure bcompliance
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,584
Bloomington, IN
As Randy said if he is acting as a broker for a loan going through the bank he has a financial interest in that loan.

(f) Tangible economic benefit rule--

(1) In general. An extension of credit is considered made to an insider to the extent that the proceeds are transferred to the insider or are used for the tangible economic benefit of the insider.
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