Moreover, the Hearing Board found that Rukavina either did not provide his clients with a controlled business arrangement
disclosure at all or did not provide it to them until the closings; even then, in one instance he signed the disclosure himself under his client's power of attorney.
BUSINESS WIRE)--July 16, 1997--SummerHill Homes, a premium builder of luxury homes, announced the formation of a Controlled Business Arrangement
with E-Loan, a Palo Alto-based Internet mortgage company.
The rule provides that a controlled business arrangement
is not a violation of Section 8 of RESPA and permits referrals of business to an affiliated settlement service provider if: (1) the consumer receives a written disclosure of the nature of the relationship and an estimate of the affiliate's charges; (2) the consumer is not required to use the controlled entity; and (3) the only "thing of value" received from the arrangement, other than payments for services rendered, is a return on ownership interest.
Assuming these factors, taken together, indicate that a bona fide venture is present, the entity may take advantage of the CBA exemption provided, of course, that it complies with the general controlled business arrangement
requirements concerning disclosure, required use and returns on ownership interest.
Such a service can take the form of a computerized loan origination entity (CLO), where the Realtor assumes responsibility for origination of the loan; a controlled business arrangement
(CBA), where a mortgage broker or lender takes responsibility for origination and the Realtor is a passive partner; or an electronic referral of information about the customer to the lenders on the MARS network.
At First Franklin, we entered into a controlled business arrangement
in late 1994 with Contempo Realtors, San Jose, California, and several mortgage brokers.
According to Keleher, the two firms have entered into a controlled business arrangement
, giving Prudential New Jersey Realty customers and sales associates access to an in-house mortgage banker.
disclosure of controlled business arrangement
The final RESPA regulations expressly provide for the federal preemption of state controlled business arrangement
laws that are inconsistent with RESPA, but restrict HUD from construing those provisions that impose more stringent limitations on controlled business arrangements
as inconsistent with RESPA "so long as they give more protection to consumers and/or competition.
The second issue that affects many mortgage banking operations that are part of a controlled business arrangement
involves the question of when a consumer is required to use a particular lender.
While such controlled business arrangements
have been common over the years in mortgage lending, the company feels it can present substantial conflicts as they affect the all-important opinion of value.
There will also be a surprise guest with significant experience with mortgage banking controlled business arrangements