Affiliated business arrangements and control

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Question:

My compliance officer says we have an affiliated business arrangement with a title insurance company that is 20% owned by our holding company. I thought the rules kicked in with 25% ownership. Who’s right?

Answer:

It appears that you and your compliance officer are arguing over different concepts. Affiliated business arrangements are a RESPA concept triggered by a common ownership level as low as 1%. Control under the Bank Holding Company Act and Regulation Y is triggered by 25% ownership.

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