An MLO works for a mortgage company that is affiliated with a real estate brokerage. A borrower purchases a home through that brokerage and is referred to the affiliated mortgage company. What must occur for this arrangement to be legally compliant?

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An Affiliated Business Arrangement disclosure must be provided and the borrower must be free to use other providers Under RESPA Section 8(c)(4), Affiliated Business Arrangements (AfBAs) are permissible if: (1) the referring party provides an AfBA disclosure to the consumer at or before the time of referral, (2) the consumer is not required to use the affiliated provider, and (3) the only thing of value exchanged is a return on ownership interest. "The real estate agent must waive their commission on..." is overly restrictive — the arrangement is not automatically prohibited. "The lender must reduce fees to offset any benefit re..." has no regulatory basis. "An Affiliated Business Arrangement disclosure must b..." is not required and unrelated to RESPA compliance.

An MLO works for a mortgage company that is affiliated with a real estate brokerage. A borrower purchases a home through that brokerage and is referred to the affiliated mortgage company. What must occur for this arrangement to be legally compliant?

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