One of our loan processors is going to be married to an appraiser we use 80% of the time. At first I assumed this was an affiliated business arrangement, after reading Kirchmans, now I'm not so sure. Any opinions?

Marriage to an employee does not constitute an affiliate relationship. However, if I was running a bank and had one outside appraiser doing 80% of my appraisals, I'd be looking at that practice and be thinking about why do I have all my eggs in one basket???

I do not feel you have an AfBA in this circumstance. Your bank (I assume) has no business interest in the appraisal company and vice-a-versa, nor do you have any “business agreement” that X number of your appraisals are to be ran through that company. As I understand the AfBA, it is to guard against affiliates unfairly benefiting by referring business to an “affiliate” and to advise the borrower the “referrer’ has a business and financial interest with the “affiliate” they are referring the borrower to.

The only thing I may consider guarding against is 100% of the loan officer’s appraisals going to this company. This might, and repeat might, be construed as a “conflict of interest” since, in the long run, he/she will benefit from the increased income of his/her new spouse.

I also agree with rclary’s comments about, “all my eggs in one basket”.

Of course, depending on the size of the community, one appraiser may be your only choice (and/or your only competent choice). You'd want to document that, if it's the case.

Small town, not many options. So the concensus would be "not an affiliated business", but keep an eye on the number of referrals?