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One question that we are routinely asked about is the timing of the Affiliated Business Arrangement disclosure form under the Real Estate Settlement Procedures Act “RESPA.” The RESPA Affiliated Business Arrangement (AfBA) disclosure form is required to be given to a consumer whenever a settlement service provider refers that consumer to a another settlement service provider with whom the referring party has an ownership interest or other beneficial interest in.

The RESPA AfBA ownership threshold is any person or corporate entity who holds more than a one percent (1%) ownership in both companies. HUD says the referring party must give the affiliated business arrangement disclosure form to the consumer at or prior to the time of referral. If the AfBA disclosure form is only signed at the closing then HUD deems the disclosure to be out of compliance with the RESPA regulations. The Affiliated Business Disclosure form must describe the business arrangement that exists between the two settlement service providers and the AfBA disclosure must give the borrower an estimate of the referred settlement service providers fees.

The United State Department of Housing and Urban Development (HUD) released their 341 page final RESPA rule today.

I will provide more analysis on this rule later but I wouldn’t get too excited or upset about it yet as this rule appears to have more legal and congressional authority issues than you can imagine.