Affiliated Business Arrangements Called into Question

Posted December 1, 2007

In today’s Charlotte Observer, there was an article written about Affiliated Business Arrangements. The article spoke mainly about real estate agents and title services. There were many big companies that have recently come to major settlements with the government (in regards to fines) related to such practices.

From a business standpoint, I understand the Affiliated Business Arrangement. I don’t blame real estate companies for wanting to not only make money from the mortgage, insurance, title and other related services, but also to have some control over them. This allows companies to keep things moving.. I get that.

However, what this article talks about is the “steering” that takes place in many offices and the fact that the buyer has no idea that agents may get a cut from those services. Again, I understand why, but as a mortgage professional that has had the media on my tail along with several agents over the years blast me due to ysp, I find this an ironic turn of events.

I am not a big fan of married services. How does the buyer get the best service if everything is being pushed “in house”? Its one thing when an agent refers a buyer to the in house lender because that lender gets the job done and saves the buyer money… but when the referral is because the agent has extra money (or bonuses) in the balance, I feel that sorta goes against the whole “fiduciary duty” that real estate agents are supposed to be held to.

I am a big fan of everyone making as much as they can for the work we all do. I think it should be a win-win for all involved, especially the client we all are working for. And now it seems that mortgage brokers are not the only ones with cross-hairs on their backs…

As a buyer, one is best advised to ask if the one referring you to another is compensated in any way for the referral. This may help you decide if using that referral solely based on one referring is the best move.

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For professional mortgage assistance and home loan pre-approval in Charlotte, NC and the surrounding areas, call me at 704-248-8694 or visit www.EdNailor.com/apply

Category Posted in Commentary