Our bank holding company has a mortgage affiliate. We refer residential loans to them therefore we feel we should be providing the AfBA. However, we've been questioning who we actually show on the disclosure. The mortgage affiliate does all of the settlement services required on a residential loan so we believe we should just show the name, address, etc of the mortgage company and relationship. That seems pretty clear. What we found recently is an AfBA that had our flood vendor as a required service provider on a mortgage loan that we did in the bank. We believe this is incorrect. Can someone clarify that the only time we would actually list someone on this form is if we have an "affiliated" relationship with that provider? Just because they are the vendor does not make them a provider for purposes of this disclosure or does it? Hope I didn't confuse anyone too much! Thank you.

Angela. Please go back and edit your posting to spell out what AfBA is at least once. We aren't all as conversant with all compliance and other banking areas as we might like, and I'll gladly admit that AfBA threw me for a loop.

We all ought to remember this.

[This message has been edited by John Burnett (edited 01-24-2001).]

If you are not affiliated with the flood vendor, you do not use this form. Perhaps staff is confusing this with the requirement to advise customers of required providers with the GFE? If the vendor was an affiliate they would receive the affiliate notice in addition to the GFE notification.

Thank you John for reminding to do this. I also have times when I'm not sure what someone else is referring to. In case anyone is still not sure, I was referring to the Affiliated Business Arrangement Disclosure required under RESPA.

There are two separate and distinct notices. One is the "required service provider" notice. This is placed on or with the GFE and tells the applicant the name, address, cost, and relationship of the service provider. The relationship can be that the service provider is a customer of the bank or that the provider is one that the bank regularly uses.

The other notice is the Affiliated Business Arrangement disclosure -- formerly the controlled business arrangement. That notice is provided before making a customer referral to an affiliated business such as the mortgage company. The notice is supposed to be given before making the referral.

In the example, the AfBA notice would be given by the bank to the customer who is asking about a mortgage loan and is referred to the related mortgage company.

Unless the bank or the mortage company has an ownership or control relationship with the flood cert company, there would NOT be an AfBA notice given, but there would be a required service provider notice as a part of the GFE.

It is also worth noting that the lender may not require the applicant to use an affiliated business unless it relates to the safety and soundness of the underwriting process (credit reports, appraisals, and attorneys.)

Isn't RESPA fun?

Lucy,
In a word - NO!!!!

BTW - I'm still waiting for the lawsuit when a consumer thinks that Bank, by saying POS for insurance and taxes on the HUD forms for a home equity loan, has actually PAID those fees on behalf of the customer.

You know, when the house burns to the ground and there's no insurance because the customer thought the Bank paid it?

Your tax dollars at work.....