Finance
Under the Real Estate Settlement Procedures Act (RESPA), a 'controlled business arrangement' (now called affiliated business arrangement) requires:
AThat all settlement services be provided by affiliated companies
BDisclosure to the consumer and the consumer's freedom to choose other providers✓ Correct
CPayment of a referral fee to the broker for recommending the affiliated service
DGovernment approval before operating
Explanation
RESPA's affiliated business arrangement (AfBA) requirements mandate that when a lender, real estate broker, or title company refers business to a company in which they have an ownership interest, they must (1) disclose the arrangement to the consumer, (2) disclose the estimated charges, and (3) not require use of the affiliated company.
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