What law requires affiliated business relationships that include ownership greater than 1% to be disclosed to the borrower?

The Real Estate Settlement Procedures Act (RESPA) mandates that any affiliated business relationships where one party has an ownership interest exceeding 1% must be disclosed to the borrower. This requirement is in place to promote transparency in the real estate transaction process and to safeguard the interests of consumers. By requiring disclosure of these affiliations, RESPA aims to prevent potential conflicts of interest and ensure that borrowers are fully informed about who is involved in their transaction and how they may be financially connected.

This disclosure is crucial because it helps borrowers understand that they might be directed to certain services, which could benefit the affiliated business financially. The intent of the law is to foster informed decision-making by ensuring that consumers are aware of any financial ties that might influence their choices in the home-buying process. It ultimately empowers consumers by enforcing accountability and transparency in real estate transactions.