RESPA section 8(c)(4) · 12 CFR 1024.15Affiliated business arrangement disclosure: when a brokerage refers to a company it owns part of
Many brokerages own part of a title, mortgage or escrow company. Referring clients there is allowed under RESPA only if three conditions are met (12 CFR 1024.15(b)). First, the person making each referral gives the client a written disclosure – in the format of Appendix D to Part 1024, on a separate piece of paper, no later than the time of the referral – explaining the ownership or financial interest and the estimated charge or range of charges. Second, nobody making the referral requires the client to use that provider (lenders may still choose the lender's own attorney, credit bureau or appraiser). Third, the only thing of value the referrer receives is a bona fide return on the ownership interest – not payments that vary with the number of referrals.
The three conditions (§1024.15(b))
1. Written disclosure
Appendix D format, on a separate page, at or before each referral: the relationship, the ownership or financial interest, and the estimated charges.
2. No required use
The client must be free to choose another provider (exceptions only for a lender's attorney, credit reporting agency or appraiser).
3. Only a return on ownership
Bona fide dividends and distributions – never payments based on, or varying with, the number of referrals.
What the TC keeps on the deal
- The signed AfBA disclosure, dated on or before the referral.
- A note of who referred the client and when.
- Proof the client was told they may shop for other providers.
Where it goes wrong
- The disclosure is given at closing instead of at the referral.
- It is buried inside another document instead of on its own page.
- Agents get paid per file sent to the affiliate – that is a referral fee, not a return on ownership.
- A missed disclosure is excused only if the referrer proves a bona fide error despite reasonable procedures; a mistake about the law is not a bona fide error (§1024.15(b)(1)(iii)).
Questions brokers and TCs ask
When must the affiliated business arrangement disclosure be given?
No later than the time of each referral, on a separate piece of paper; a lender may give it with the good faith estimate, and an attorney requiring a title agent when engaged (12 CFR 1024.15(b)(1)).
Can my brokerage require clients to use its title company?
No. One condition of the exemption is that nobody making the referral requires use of the provider (12 CFR 1024.15(b)(2)).
Can agents be paid for sending files to the affiliate?
The only thing of value allowed is a return on an ownership interest; payments that vary with the amount of referrals are not a return on ownership (12 CFR 1024.15(b)(3)).
Related guides
In ClosingCode, add "Give the AfBA disclosure" as a step in your office checklist – every new deal gets it as a dated task, and the signed copy goes in its documents.
Start free trialSource: 12 CFR 1024.15 (Regulation X, eCFR, read October 25, 2026); 12 U.S.C. 2607(c)(4).
General information, not legal advice. ClosingCode is software; it is not a law firm, lender, title company or brokerage. Lenders and investors can add their own rules. This guide is not a substitute for the advice or services of an attorney.