Too many real estate agents and brokers are in the dark when it comes to the very stringent regulations in RESPA, the Real Estate Settlement Procedures Act. Not only does RESPA and HUD regulate AfBA's, or Affiliated Business Arrangements, but also many other aspects of the settlement of real estate transactions and settlement provider marketing practices. Get a thorough understanding of RESPA, AfBA's and Marketing Agreements here.
RESPA, or the Real Estate Settlement Procedures Act, was enacted in 1974 by Congress in order to bring transparency to the settlement of real estate transactions. It regulates disclosure, fee sharing, referral business and marketing pacts between service providers.
RESPA covers a huge portion of real estate transactions. They avoided the variety of state statues and differences by regulating the lenders. This article gives the types of loans that are regulated by RESPA.
Though most are covered, there are very specifically defined types of loans not regulated by RESPA, the Real Estate Settlement Procedures Act. Learn those loan types in this article.
RESPA is very clear about the types of service providers that fall under its regulatory control. Generally a good rule of thumb is that those involved prior to closing are regulated, and those that are providing services after closing are not. It's not a blanket, so learn here the specific services under the regulation of RESPA.
Real estate agents and brokers are fined and lose licenses regularly due to RESPA violations. Don't get burned simply because you don't know the rules. There are a lot of problems out there related to referral of business and cooperative marketing arrangements. Learn what you can and cannot do.
An AfBA, or Affiliated Business Arrangement, is one in which one party refers business to another in which they have an interest. This article gives examples and talks about legality.
RESPA has three main criteria to satisfy the legality of an AfBA, or Affiliated Business Arrangement. Learn those in this article, as well as why this isn't enough to be safe.
HUD didn't believe that RESPA went far enough in regulating Affiliate Business Arrangements. HUD came up with 10 points to evaluate whether an AfBA is really a stand-alone and viable business, and whether it is providing services of value for the appropriate costs. Get the 10 points list here.
