Definition: AfBA stands for Affiliated Business Arrangement as related to real estate settlement procedures and RESPA, the Real Estate Settlement Procedures Act.
An AfBA is an arrangement to share or refer business between two different companies involved in providing services in the closing of a real estate transaction. There may be ownership interest of a party in both the business referring out the service and the business receiving the referral.
The practice is not illegal, but is regulated by RESPA to assure full disclosure to the consumer of any relationships where business is referred in this way.
Examples:
When a real estate broker has a 25% ownership in a title insurance company and refers business to that company for her real estate transactions, this is an AfBA.
