We have a real estate agency that has a mutual shareholder (they hold less than 7%) that referred a borrower over to our lending company. When our investor reviewed the loan for purchase, they put it on hold stating we need to prove we provided the borrower with the Affiliated Business Disclosure. I have gone through 1024.15, but am still confused. In this instance we did not refer the borrower, nor do we ever refer anyone to the real estate company. Would we still be required to send a ABD to the borrower, even though we didn't refer nor do we require them to use the real estate company?

I don't think they are looking for an ABD that the bank gave the consumer - they are looking for the one that the real estate agency provided them for their referral of the customer to the bank.

How does the investor even know this referral happened? Was the real estate agency paid a fee for the referral and if so, what did they do to earn it?

The Closing Disclosure lists the RE Agency, years ago (more than 5!) we submitted a list of affiliates when we sent our approval package and showed the RE Agency. Unfortunately when they did that, they didn't understand the true requirement of RESPA on the subject. The owner of the RE Agency has no voting power/control and owns less than 7%. I have asked if the investor would accept the RE Agency's ABD as proof, but they will not budge and state because we used them WE have to produce the document.

just to add, we never refer borrowers over to the RE Agency, or any RE Agency for that matter.

Well, you need to get the affiliate list updated with this investor and they are also going at this bass ackwards

Thank you for the input, R! We are doing just that. I've been laughing at the last part of the sentence for about 5 minutes now, that should tell you how done I am with adulting today!