Letters to the Editor

Re: 'Recommendations fall short for affiliated-business troubles' (June 11)

Dear Editor:

Ms. Geffner claims that affiliated business arrangements are "payoffs," which are "inherently" anti-consumer and "sickeningly flawed." Those choices of inflammatory words are tip-offs that she either is an advocate for one side of the debate -- small title agencies -- or that she simply does not understand the affiliated-business concept, especially those that involve real estate brokerages.

She's right, consumers are confused about title insurance, but that is hardly the fault of ABAs, and she makes no effort to show that ABAs are at fault. She ought actually to look at the HUD requirements for ABA consumer disclosures -- especially the part that requires bold letters telling the consumer that they should shop around (there is no such disclosure from non-ABAs.) She ought to realize that the people making the referrals -- agents -- usually have no ownership in the ABA and, therefore, no "inherent" conflict of interest. She ought to look at the capitalization, employee, office space, etc., requirements of HUD for an ABA to be legitimate. She ought to actually check some ABAs and see how their service and pricing compare to those of competitors. But, if one wants to be an "advocate" for one party in a complex debate, it's often inconvenient to be confused by the facts.

And if ABAs have the big advantage she claims, why is the capture rate within most brokerages usually below 20 percent? Why is it that many ABAs fail? Perhaps consumers are not as dumb as Ms. Geffner claims. And perhaps the great majority of agents take their duties seriously and are not going to jeopardize a transaction (and their commission) or a future relationship with consumers over the possibility of a few dollars for a referral. Perhaps ABAs are just one more form of competition -- competition that scares the heck out of some longtime players whose models bring less and less value to consumers.

Bob Blount
CEO
RE/MAX Allegiance
Maryland, Virginia, Washington, D.C.

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