Dear RESPRO® Member:
As we enter 2008, there’s no doubt that affiliated businesses are becoming increasingly important to
companies in this challenging housing market. Not only do they have the potential to provide critical
revenues, but they also give us the resources needed to assure that every home buyer is able to close
his or her transaction.
There’s also no better time to grow our affiliated businesses’ success rates and market share for the
future. The current problems in the mortgage industry have refocused home buyers and our sales
personnel on the importance of using in-house mortgage, title, and other core services, which have a
high degree of supervision, quality service, and reasonable fees. This movement towards quality
affiliated services reinforces what RESPRO® has been advocating for years.
As Chair and Vice Chair of RESPRO®, we’re glad to present to you RESPRO®’s 2007 Summary of Activities.
As you know, RESPRO® is the only organization that is solely dedicated to helping real estate brokers,
home builders, mortgage lenders, title companies, and other settlement service providers build
successful, legally-compliant affiliated businesses. Its importance is only heightened by the necessities
of today’s marketplace.
The 2007 Annual Summary summarizes how RESPRO® worked on your behalf to counter an increasingly
hostile federal and state regulatory environment towards affiliated businesses. It also summarizes the
resources you have through RESPRO® in 2008 to help you capitalize the opportunities that your
affiliated businesses can provide you in this marketplace.
There’s no organization with a better track record in fighting unnecessary and anti-competitive
regulatory restrictions on affiliated businesses, and no organization with more resources to help you
We look forward to working with you this year, and we hope to see you at RESPRO®’s April 1-3, 2008
Annual Conference in Washington, D.C.!
Arthur Sterbcow Ronald J. Peltier
President President & CEO
Latter & Blum, Inc. Realtors HomeServices of America, Inc.
RESPRO® Chair RESPRO® Vice Chair
Real Estate Service Providers Council, Inc.
2007 Annual Summary of Activities
I. RESPRO® Regulatory Advocacy on Behalf of Affiliated Businesses
In 2007, affiliated businesses (AfBAs) faced more regulatory scrutiny at the federal and state level
than they have in more than a decade. Much of this scrutiny was triggered by complaints by
independent competitors of mortgage, title, and other settlement services, who continued to urge
Congress, HUD, and state legislators/regulators to impose restrictions on the operations of affiliated
businesses. Some of the scrutiny was due to negative press about “sham” affiliated businesses,
which tainted the regulatory waters for legally-compliant operations as well. The following is a
summary of RESPRO®’s work on behalf of affiliated businesses challenges against affiliated
businesses in 2007, with a preview of what lies ahead in 2008 that can impact the operations of
A. 2007 RESPRO® Advocacy
1. Government Accountability Office (GAO) Report to Congress: GAO’s April 2007 Report to
Congress on competitiveness in the title industry provided a neutral analysis of the impact
of affiliated businesses in the home buying market, despite the efforts of independent
competitors to paint them as abusive to consumers during their briefings with GAO officials.
The GAO pointed to information provided to it by RESPRO® that affiliated businesses can be
beneficial because they provide consumers with better service and potential cost savings,
and it referred to RESPRO®'s 2006 Economic Study by The CapAnalysis Group that proved
affiliated title costs to be competitive with those of independent title businesses. RESPRO®
also submitted an analysis of the affiliated business sections of the GAO Report to Congress
to members of Congress, Department of Housing and Urban Development (HUD) officials,
and the National Association of Insurance Commissioners (NAIC). Our analysis reinforced
the GAO’s conclusions about the consumer benefits of affiliated businesses and rebutted
allegations made by their critics.
2. Education of Members of Congress on the Benefits of Affiliated Businesses: Some
independent competitors of affiliated businesses have urged members of Congress to place
restrictions on affiliated businesses, with one Congressional witness in 2006 actually
proposing to ban their operations through federal legislation. During 2007, RESPRO® met
with representatives of the majority of members of the House Financial Services and Senate
Banking Committees, as well as representatives of the nation’s major consumer
organizations, to educate them on how legally-compliant affiliated businesses across
industry lines can provide consumers the benefits of competitive costs, convenience, and
3. Elimination of AfBA Discrimination in Predatory Lending Legislation: In November 2007,
the U.S. House of Representatives passed predatory lending legislation with RESPRO®-
supported language that would assure that the legislation does not discriminate against
loans offered by mortgage companies using affiliated settlement service companies by
making such loans subject to the Homeowners Equity Protection Act’s (HOEPA) restrictive
terms. If not corrected, any mortgage companies could be prevented from using affiliated
title and settlement service companies for lower-priced mortgage loans.
4. Proposed Indiana Ban on Affiliated Businesses: In 2007, the Indiana Department of
Insurance circulated a draft bulletin that interpreted Indiana state law as banning real estate
brokers, home builders, and mortgage companies from owning any part of a state-licensed
title agency. RESPRO® organized its members with Indiana-based operations to convince
the Department to drop this interpretation.
5. Proposed Ohio Restriction on Title Agency Ownership: In 2007, the Ohio Department of
Insurance finalized a regulation to incorporate HUD’s joint venture guidelines into Ohio title
insurance regulations. The final regulation excluded a proposal by the Department that
would have prevented real estate brokers, home builders, and mortgage companies from
owning more than 10% of the voting stock in a state-licensed title agency, after RESPRO®
and the Ohio Association of Realtors worked together to convince the Department to
eliminate this restriction.
6. Proposed Texas Restriction on Title Agency Ownership: In 2007, an independent title
company petitioned the Texas Department of Insurance to prohibit state-licensed title
agencies from receiving more than 50% of their business from an affiliate, and to require
them to get 90% of their business from the county in which they are licensed. According to
the RESPRO® Chapter of Texas, the adoption of this petition would have meant the end of
affiliated title businesses in Texas. The RESPRO® Chapter of Texas organized members with
Texas-based title operations to oppose this restriction, after which the Department
proposed to deny it. The RESPRO® Chapter of Texas will continue to oppose the proposal in
B. 2008 Outlook
1. RESPA Reform Regulation: In 2008, HUD is expected to propose a new RESPA
regulation in February 2008 that will modify the Good Faith Estimate (GFE).
RESPRO® has been an active participant in RESPA rulemakings throughout its history,
always with the goal of assuring that any regulation treats all providers equally,
regardless of their industry or affiliation. We will continue to be an active
participant in 2008.
2. Legislation to Authorize Additional RESPA Penalties: HUD also has announced that it
will ask Congress to pass legislation in 2008 to impose additional penalties for RESPA
violators, including the ability to impose civil money penalties and to ask for
disgorgement of profits earned from alleged violations. While RESPRO® has long
supported strong RESPA enforcement, we have already started our efforts to assure
that any legislation authorizing additional RESPA penalties is coupled with provisions
that assure that HUD provides fairer, more consistent, and more clear regulatory
guidance under RESPA.
3. Predatory Lending Legislation/Discrimination of Affiliated Businesses: RESPRO® will
continue its efforts to assure that any predatory lending legislation passed by
Congress in 2008 does not discriminate against loans offered by mortgage
companies using affiliated title companies by making such loans subject to the
Homeowners Equity Protection Act’s (HOEPA) restrictive terms (see above).
4. Predatory Lending Legislation/Definition of “Loan Originator”: RESPRO® also will
continue efforts to correct the definition of the term “loan originator” in the House-
passed bill, which could result in persons who are not otherwise involved in the
mortgage process (e.g., a real estate agent/broker who assists a buyer with a
mortgage loan, a marketing or data entry employee of a mortgage company) having
to get licensed or registered as loan originators under the legislation’s requirements.
5. New York Legislation to Require Multiple Sources of Business: In 2007, a title licensing bill
was introduced in both the New York Assembly and Senate that would require affiliated title
businesses licensed in the state to have multiple sources of business. RESPRO® has
organized its members with New York operations to oppose this proposal in 2008.
6. California, Arizona, and Texas Scrutiny of Affiliated Businesses: In 2007, the California
Department of Insurance issued a statement saying that it will rehaul the regulatory
environment for California title companies. One of the items on its agenda was the
regulatory environment for affiliated businesses. Separately, state regulators in Arizona and
Nevada have been scrutinizing affiliated businesses in the state. In April 2007, RESPRO®
members in Arizona, California and Nevada joined together to establish a West Coast
Chapter in order to have an organized presence of affiliated businesses in these states. The
Chapter has met with key regulators in these states to educate them on the benefits of
affiliated businesses, and will continue to actively monitor state regulatory and legislative
activities that may impact affiliated businesses.
C. Advocacy Resources for RESPRO® Members
1. On-Line Affiliated Business Advocacy Center: In 2007, RESPRO® developed an on-line
Affiliated Business Advocacy Center for our members at www.respro.org under Government
Affairs/The Truth About AfBAs, at which they can access information to use in educating
their state regulators and local media about the benefits of affiliated businesses; such as
talking points, economic studies, consumer surveys, and positive statements about affiliated
businesses by federal and state regulators.
2. State Issues Task Force: RESPRO®’s State Issues Task Force, open to all members, meets
monthly to exchange information about state regulatory and legislative activities that can
impact affiliated businesses. To join the Task Force, contact Terrie Worley at
3. Policy Committee: RESPRO®’s Policy Committee, open to all Board members and
representatives of their companies, continued to meet monthly to discuss activities by
Congress, HUD, and other federal regulators that specifically can impact affiliated
businesses. To join the Policy Committee, contact Terrie Worley at email@example.com.
II. Regulatory Compliance Help for Affiliated Businesses
The federal and state regulatory environment for affiliated businesses under the Real Estate
Settlement Procedures Act (RESPA) and other federal and state laws has always been complicated,
confusing and uncertain. Today, however, it is even more important to understand its twists and
turns since the Department of Housing and Urban Development (HUD), state regulatory agencies,
and the plaintiff’s bar have stepped up their enforcement activities. The following are RESPRO®
regulatory compliance resources designed specifically to help our members have legally-compliant
affiliated businesses and marketing agreements.
A. On-Line Regulatory Compliance Center: During 2007, RESPRO® continued to build its
regulatory compliance resources specifically designed for affiliated businesses, located at
www.respro.org under “Regulatory Compliance Center”. This is the most comprehensive library
of regulatory compliance information for affiliated businesses in the country.
B. Affiliated Business Regulatory Compliance Kit: In January 2007, RESPRO® unveiled its
Affiliated Business Regulatory Compliance Kit, a comprehensive desktop reference kit with
readily accessible, easy-to-understand information designed to give our members the answers
to day-to-day regulatory compliance information at their fingertips. To order the Kit, visit
www.respro.org under “Marketplace”.
C. Survey of State Affiliated Business Laws: In 2007, RESPRO® published its new Survey of
State Affiliated Business Laws, the nation’s most comprehensive survey of state laws and
regulations that affect the ability of real estate brokers, home builders, mortgage companies,
and title/settlement service firms to create and efficiently manage affiliated businesses.
D. RESPRO® Publications, Audio Cassettes and CDs: RESPRO® continues to offer its RESPA
Guide for Salespersons, RESPA Primer for Joint Ventures, and RESPA Guide to Affiliated Business
Disclosures, with substantial discounts for RESPRO® members. It also substantially built its
supply of audio cassettes and CDs from RESPRO® Annual Conference and Fall Seminar regulatory
compliance sessions, also with substantial discounts for RESPRO® members. To view RESPRO®
publications, audio cassettes and CDs, visit our web site at www.respro.org under
E. Access to RESPRO® Headquarters: RESPRO® members continue to have access to RESPRO®
staff who are familiar with RESPA and state laws and who can work with them on their particular
regulatory compliance question.
III. Affiliated Business Growth Strategies
Creating an affiliated mortgage, title, insurance, or other settlement service business does not
ensure that home buyers and owners will use its services. For 15 years, RESPRO® has served as a
resource of information on marketplace trends and operational strategies from the nation’s leading
affiliated business executives and consultants. The following is a summary of resources that
RESPRO® has available to our members to help them grow their affiliated business’ success rate and
A. On-Line Affiliated Business Strategies Center: During 2007, RESPRO® grew its on-line
comprehensive library of information about how to create and grow affiliated businesses, with
articles and presentations by successful affiliated businesses and industry consultants and
interviews with affiliated business innovators.
B. RESPRO® Quarterly Magazine: RESPRO®’s Quarterly Magazine featured articles by the
nation’s most successful affiliated business executives and leading industry consultants on how
to create and grow an affiliated business’ success rates and market share.
C. RESPRO Audio Cassettes and CDs: RESPRO® substantially built its supply of audio cassettes
and CDs from RESPRO® Annual Conference and Fall Seminar sessions on marketplace trends and
cross-marketing strategies for affiliated businesses, with substantial discounts for RESPRO®
D. NEW in 2008! RESPRO® Member Forum: In January 2008, RESPRO® will launch an
electronic Member Forum to enable RESPRO® members to directly communicate with each
other on marketplace trends, cross-marketing strategies, and regulatory compliance issues
affecting their ability to build successful and legally-compliant affiliated businesses and other
IV. RESPRO® Conferences and Seminars
A. RESPRO® Annual Conference: RESPRO®’s 2007 Annual Conference, “The Keys to Successful
Affiliated Business & Strategic Alliances”, was held April 8-10 at the Mandarin Oriental Hotel in
Washington, D.C. The conference attracted over 200 affiliated business executives and received
a ranking of 44% “Excellent” and 45% “Good” by attendees.
RESPRO®’s 2008 Annual Conference will be held April 1-3, 2008, also at the Mandarin Oriental
Hotel in Washington, D.C. This year, RESPRO® and The Realty Alliance, a networking
organization of the nation’s largest real estate brokers, will hold their meetings back to back in
order to save those who want to attend both the RESPRO® conference and The Realty Alliance
meetings an additional plane ticket, hotel stay and at leas at one full work day away from the
office. RESPRO® members and their employees get substantial discounts to RESPRO®®'s Annual
Conference, Fall Seminar and Audio Seminars which offer a broad array of sessions on
marketplace trends and business strategies.
B. RESPRO® Fall Seminar: RESPRO®’s 2007 Fall Seminar, “Affiliated Businesses & the Pursuit of
Excellence”, was held November 5-7, 2007 at the Wynn Resort in Las Vegas, Nevada. The
Seminar also attracted over 200 affiliated business executives and received a ranking of 46%%
“Excellent”, 46% “Good” by attendees. For the first time, RESPRO offered attendees the option
of choosing a basic track that covers the fundamentals of running an affiliated business, and an
advanced track for more complex challenges.
RESPRO®’s 2008 Fall Seminar will be held November 5-7, 2008 at the Ritz Carlton Hotel in New
C. NEW in 2008! RESPRO® Audio Seminars: In 2008, RESPRO® will host quarterly series of
audio seminars featuring the nation’s most successful affiliated business executives and
RESPA/state law experts, with strategies on how to grow their success rates and advice on how
to comply with RESPA and other federal/state laws.
Key RESPRO® Staff
Executive Director Government Affairs Director
Sue Johnson Ron Maas
202-862-2051, Ext. 210 202-862-2051, Ext. 213
Meetings & Marketing Director Membership Director
Rae Brevard Rita Reynolds
(317) 472-2430 202-862-2051, Ext. 212
202-862-2051, Ext. 214