All rights reserved. Insufficient disclosure to consumers by firms involved in CBAs is another common violation.
Violations can be a serious federal crime.
In a CBA, a person in a position to refer settlement service business has either an affiliate relationship or ownership interest of over one percent in another business which provides settlement services, and directly or indirectly refers business to that provider. An example of such a person would be a licensed real estate broker who is also part owner of a mortgage lending company. The person making a referral under a CBA has an affirmative obligation to provide a disclosure statement to the person receiving the referral. The relationship between the referring party and the settlement service provider may be very complicated and therefore require a detailed explanation. Although the referring party may have a direct ownership or financial interest in the settlement service provider, their connection may be indirect as well.