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BOL Conferences Top Gun 23
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#332523 - 03/12/05 04:46 PM RESPA: AfBA Questions

I've been reading some threads on the providing of the AfBA disclosure and one I came across had some comments from Lucy Griffith about providing the disclosure to the insurance affilite for the referral of homeowner's insurance. She also indicated that she felt that if the insurance company referred a customer to the bank or mortgage company for a mortgage loan, the insurance company would provide the disclosure as well. Is anyone actually doing that with their insurance company? Not the referral to but the referral from?

I also have a question about the timing of delivery of the disclosure. If our teller or Personal Banker makes the referral are we correct in that they would provide the disclosure at the time of the referral? How do other banks make the form available to their tellers/CSRs, etc? Our loan process is centralized so that the front-line employees are not able to print the form right then so we are looking at building it into the deposit platform so that the disclsoure would "pop up" if you will when the teller/PB knows that they would be initiating the referral. They are required to track their referrals through the sales portion of our deposit platform so we think this would be the appropriate place to have the form. Also the person receiving the form is required to sign it? Would appreciate anyone else's process for how they do this. Thank you as always.

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Lending Compliance
#332524 - 03/21/05 02:56 PM Re: RESPA: AfBA Questions
Jan94 Offline
Platinum Poster
Joined: Mar 2001
Posts: 828
I'm following up with my original post above. The question has come up about the completion of the form. The instructions provide for the naming of a Subject Property. What if the individual does not yet know the property but just wants to talk with someone? Can we put "To Be Determined" or does there have to be an actual property address indicated? Perhaps we are taking the definition of referral incorrectly and is the "referral" only in reference to where there is likelihood a closing could take place? As I stated above, our bank employees get paid incentives for "referrals" so we want to make sure we are handling this properly. Thank you for your thoughts.

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#332525 - 03/21/05 03:21 PM Re: RESPA: AfBA Questions
complianceman Offline
Platinum Poster
Joined: Mar 2005
Posts: 687
New Albany, IN
When discussing RESPA and AfBa together, you have to look at the meaning of RESPA: Real Estate SETTLEMENT Procedures Act. The AfBa only pertains to SETTLEMENT service providers. For example, Flood Determination company that are affiliated with your institution, Title Companies and Settlement Agents affiliated with your company. You may was to review the definition of Affiliate in RESPA. So, my response would be that you are confused with the term refferal as it relates to Affilliate in RESPA.
The opinion stated here is what it is, My Opinion.

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#332526 - 03/21/05 04:50 PM Re: RESPA: AfBA Questions

I'm trying to figure this out and was going back through the materials from a BOL telephone seminar. RESPA is applicable to "federally related mortgage loans" which are loans that are to be secured by a 1st or subordinate lien or refinance of any secured loan on residential real property. One of the exemptions would be temporary financing (construction (non-perm)unless it meets other conditions). Therefore, for purposes of the AfBA we would not provide the disclosure unless the customer has an actual property that they are either purchasing or refinancing and we "referred" them to our mortgage affiliate for those services. Correct or no?

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#332527 - 03/21/05 05:10 PM Re: RESPA: AfBA Questions
GreatBlue Offline
Diamond Poster
Joined: Feb 2003
Posts: 2,362

Therefore, for purposes of the AfBA we would not provide the disclosure unless the customer has an actual property that they are either purchasing or refinancing and we "referred" them to our mortgage affiliate for those services. Correct or no?

Boy, if that were true, we'd have a huge loophole in RESPA. For example, payment of referral fees would then be legal as long as the buyer hadn't selected a property yet. I don't believe that loophole exists, and I think RESPA does apply to referrals, even if no property has been identified.

Here's the definition of "Settlement Service" per the regulation. You'll see that both making a loan and services involving hazard insurance are covered. If you refer a customer to an affiliate for any of these services, you need to do an AfBA.

Settlement service means any service provided in connection with a prospective or actual settlement, including, but not limited to, any one or more of the following:
(1) Origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of such loans);
(2) Rendering of services by a mortgage broker (including counseling, taking of applications, obtaining verifications and appraisals, and other loan processing and origination services, and communicating with the borrower and lender);
(3) Provision of any services related to the origination, processing or funding of a federally related mortgage loan;
(4) Provision of title services, including title searches, title examinations, abstract preparation, insurability determinations, and the issuance of title commitments and title insurance policies;
(5) Rendering of services by an attorney;
(6) Preparation of documents, including notarization, delivery, and recordation;
(7) Rendering of credit reports and appraisals;
(8) Rendering of inspections, including inspections required by applicable law or any inspections required by the sales contract or mortgage documents prior to transfer of title;
(9) Conducting of settlement by a settlement agent and any related services;
(10) Provision of services involving mortgage insurance;
(11) Provision of services involving hazard, flood, or other casualty insurance or homeowner's warranties;
(12) Provision of services involving mortgage life, disability, or similar insurance designed to pay a mortgage loan upon disability or death of a borrower, but only if such insurance is required by the lender as a condition of the loan;
(13) Provision of services involving real property taxes or any other assessments or charges on the real property;
(14) Rendering of services by a real estate agent or real estate broker; and
(15) Provision of any other services for which a settlement service provider requires a borrower or seller to pay.
Opinions are mine and not necessarily my employer's.

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