One of our loan officers is a shareholder of a title company that closes loans for us (I don't know what % he owns) I've read sections of RESPA, but am still not sure of the answer to this question. Do we need to make an Affiliated Business Arrangement disclosure of this relationship?

Since you would not require a customer to choose a specific title company, you should not have a qualified referral that would need a disclosure. This is an unusual situation and I would think that senior management would be closely monitoring this situation to ensure that business is not being referred to this title company, either by the loan officer or other parties connected to the bank.

You also need to look at state laws to see if there is a Chinese wall provision in the insurance code that prohibits lenders from referring to an affiliated entity, or which prohibits individuals who work on a loan file from selling insurance to that customer. For Michigan, see MCL 500.1243 at http://www.michiganlegislature.org/mileg.asp?page=getObject&objName=mcl-500-1243&userid=. Talk to your legal counsel.

I have a little more information now. The officer owns 20% of the company's stock. In my reading, I see that if a person making a referral owns more than 1% of the entity he/she is referring the customer to, a disclosure is required. In our case, although the servicer is not required, we do refer our customers to that company...so it seems as if the disclosure is required. Am I misunderstanding?

Thanks!!