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We have an affiliated law firm that provides title services to our bank. The law firm’s owner is the chairman of our board. On the affiliated business arrangement disclosure required by RESPA, do we need to list the owner’s name in addition to the law firm’s name? – IBA Compliance Connection

IBA Compliance Connection

Your go to source for compliance!

We have an affiliated law firm that provides title services to our bank. The law firm’s owner is the chairman of our board. On the affiliated business arrangement disclosure required by RESPA, do we need to list the owner’s name in addition to the law firm’s name?

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We believe that the affiliated business arrangement (AfBA) disclosure should include the name of your bank’s chairman.

RESPA and Regulation X require the AfBA disclosure to include “the nature of the relationship (explaining the ownership and financial interest) between the provider of settlement services (or business incident thereto) and the person making the referral.” To explain the ownership and financial interest in this relationship, we believe that the AfBA should name your bank’s chairman with his position at the bank and his ownership interest in the law firm providing settlement services.

For resources related to our guidance, please see:

  • Regulation X, 12 CFR 1024.15(b)(1) (The affiliated business arrangement disclosure must include “the nature of the relationship (explaining the ownership and financial interest) between the provider of settlement services (or business incident thereto) and the person making the referral . . . .)
  • Regulation X, Appendix D, Affiliated Business Arrangement Disclosure (“This is to give you notice that [referring party] has a business relationship with [settlement services provider(s)]. [Describe the nature of the relationship between the referring party and the provider(s), including percentage of ownership interest, if applicable.] Because of this relationship, this referral may provide [referring party] a financial or other benefit.”)