RESPA disclosure revealing an ownership or financial relationship behind a settlement-service referral.
An affiliated business arrangement disclosure is a RESPA notice used when a person referring settlement-service business has an ownership or other covered financial relationship with the provider receiving the referral.
Mortgage transactions involve referrals to title companies, settlement agents, appraisers, attorneys, and other service providers. A recommendation can sound neutral even when the referring company may receive an ownership return or other financial benefit from the affiliated provider. The disclosure makes that relationship visible before the borrower makes a choice.
The notice generally identifies:
Disclosure does not by itself make every referral permissible. RESPA’s affiliated-business-arrangement framework also addresses Required Use and what value may be received from the arrangement. A disclosure does not authorize a RESPA Kickback.
Borrowers may encounter this notice while selecting title, settlement, escrow, appraisal, credit-reporting, legal, or other mortgage-related settlement services. It is generally provided on a separate document no later than the time of the referral. In certain lender-required situations, timing may be tied to the loan application.
The timing matters because a relationship disclosed after the service is selected cannot help the borrower evaluate the referral beforehand. The borrower should read the notice when it arrives rather than treating it as routine closing paperwork.
| Disclosure item | Question it answers |
|---|---|
| Relationship description | How are the referring party and provider connected? |
| Ownership or financial interest | Could the referring party benefit financially from the referral? |
| Estimated charge or range | What does the affiliated provider generally charge for the service? |
| Shopping language | Is the borrower free to select another provider? |
| Acknowledgment | Does the signature confirm receipt and understanding rather than price approval? |
The model notice generally says the borrower is not required to use the listed provider and is free to shop. Narrow exceptions exist for certain lender-selected services used to represent the lender’s interests, and an attorney or law firm may have a separate title-insurance exception. Those exceptions should not be read as a broad right to force every affiliated service on the borrower.
A real-estate brokerage refers a buyer to a title company in which the brokerage has an ownership interest. At the time of the referral, the buyer receives a separate disclosure describing the relationship and giving an estimated range of title and settlement charges.
The buyer compares the affiliate’s quote with another title provider, taking into account both price and the provider’s ability to meet the contract timeline. Signing the disclosure confirms that the buyer received the information; it does not automatically mean the buyer must select the affiliate.
When this disclosure appears, useful questions include:
The disclosure is a transparency tool, not a quality rating. Affiliated status alone does not show that a provider is cheaper, more expensive, better, or worse.
Affiliated business arrangement disclosure differs from Written List of Service Providers because the provider list identifies available choices for required shoppable services. The affiliated-business disclosure reveals a covered relationship behind a referral. A provider can appear on both documents.
It differs from RESPA and Regulation X because those are the broader law and implementing regulation. This disclosure is one specific borrower-facing mechanism within that framework.
It differs from a Settlement Agent because settlement agent is a service-provider role. The notice is about the relationship between a referrer and a provider, which may or may not be the settlement agent.
It differs from Required Use because the disclosure reveals the financial relationship, while required use asks whether access to a property or service is conditioned on paying the affiliated provider.