Affiliated Business Arrangement (AfBA)
An Affiliated Business Arrangement occurs when a mortgage company, real estate brokerage, or other settlement service provider has an ownership interest in another related company, such as a title company.
AfBAs are legal if properly disclosed under RESPA. Borrowers must be informed of the relationship and cannot be required to use the affiliated provider.
The key safeguard is disclosure and choice. If an AfBA exists, the company must tell you about the relationship in writing and make clear that you are free to use any provider you choose. If you feel pressured to use the affiliated company, that is a red flag.
Why This Matters: Knowing about AfBAs helps you recognize when companies involved in your transaction are related — and ensures you exercise your right to shop for the best service and price.
Common question
Is an Affiliated Business Arrangement legal?
Yes. AfBAs are legal when they are properly disclosed under RESPA. You must be informed of the relationship between the companies.
Do I have to use the affiliated title company or provider?
No. You cannot be required to use the affiliated provider. You have the right to shop for title, insurance, and other services.
Related Topics
Related Mortgage Terms
Not sure if your service providers are affiliated? Ask — and know your right to shop.
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