Instead of riding the A train, more and more real estate brokers are jumping on the ABA bandwagon, beefing up their bottom lines with affiliated business arrangements.

A part of the industry for more than 10 years, ABAs, which are partnerships between real estate brokers and ancillary services such as title companies and lenders, today are catching fire.

“They are absolutely on the upswing. The trend has a lot of momentum behind it,” said Steve Ozonian, national home-ownership services executive for Bank of America.

“We’ve been doing these arrangements a couple of years now and have well over 100 in place now. Probably double that number is in the pipeline,” Ozonian said.

Metrocities Mortgage, a national home loan lender based in Southern California, saw a 44 percent increase in the number of ABAs at the company between 2003 and 2004, Arthur Ringwald, president of Metrocities’ loan production said. ABAs are “our main business driver,” he added.

“We’re signing about one and a half new ABAs each week,” said Pat Stone, a board member of Metrocities Mortgage. Though Metrocities has participated in such arrangements since 1992, brokers are adopting these relationships in record numbers nowadays, Stone said.

Such partnerships can help real estate brokers bolster profit margins and pose less risk than a broker attempting to open an ancillary mortgage company on his or her own.

Metrocities emphasizes promoting the real estate broker’s brand rather than competing for the broker’s customers.

In a typical arrangement, Metrocities and Keller Williams San Francisco Properties launched Metro Award Mortgage in January. Metro Award Mortgage is a joint venture between the two companies providing home buyers with an in-house, one-stop shopping service for financing and real estate services. A Metrocities loan consultant is located in the Keller Williams San Francisco office.

“By hooking up with Metrocities, Keller Williams doesn’t have to put up the capital to start its own loan business,” said Charlene Delaney, owner of Keller Williams San Francisco Properties.

According to Delaney, “It’s a win-win for both companies. It’s nice because we also get part of the profits from the loan side to help our bottom line.”

“We have a marriage with our mortgage brokerage. Other agents and brokerages date,” Delaney said.

“If a client says, ‘I am not pre-qualified,’ the agent says, ‘You can go across the hall and talk to Joe,'” Delaney said. “The typical way this happens is that a person has not made a choice of a mortgage broker. We don’t only recommend Joe, but two or three others as well. But we do say Joe is right here. Onsite is a good thing.”

“I can talk to them right away. I can run their credit immediately, take their application immediately,” said Joe Hollomon, the Metro Award Mortgage loan consultant in Delaney’s office.

Co-branding also can be a big part of ABAs depending on the comfort level of the broker, according to Stone. Some arrangements may only go as far as selecting a blended name.

Doing co-branding such as local advertising, signage and collateral brochures is typical of the higher-level ABA, according to Ringwald of Metrocities.

“In the free real estate buyers (publications) you might see a real estate brokerage named with a mortgage company promoting both entities. Plus the local real estate section of the Sunday newspaper might run a company’s ads and we might piggyback on that,” Ringwald said.

In a more basic ABA, “Some people just rent desks and place a loan officer in the Realtor’s office,” he said, without doing shared advertising and branding.

While ABAs have much to offer all parties involved, they also could raise concerns about possible violations of the Real Estate Settlement Procedures Act, which prohibits kickbacks in exchange for referrals of home buyers and sellers to settlement services providers.

“We work with one of the most prominent RESPA attorneys in the country to assure compliance,” said Ringwald. “We have developed a basic model that is well within the boundaries of RESPA regulations.”

He noted that the company has been engaging in ABAs for more than 11 years and has never been challenged on a RESPA issue. “We make sure our deals are structured correctly and we execute them correctly.”

Bank of America’s Ozonian said his company sets up its ABAs in a standard manner using contractual documents that are ABA compliant.

In addition, “we regularly have governance meetings to ensure that the insider relationship is running smoothly, including being RESPA compliant,” Ozonian said.

In addition to RESPA compliance, there are three critical elements to a successful ABA, according to Ozonian, whether the arrangement is between a brokerage and a mortgage company, title company or insurance company.

Both entities need to have a similar vision of what it takes to satisfy the customer. Second, there must be a good fit between culture and style.

Finally, a focused commitment is critical.

With a car dealership, Ozonian said, “one hundred percent of the time you’re going to meet with the financing guy. You’re going to get the advantage that the dealer has created propriety relationships with financial institutions.

“In the past, agents have seen the financing as ancillary. Now the people in the brokerage business who see the trends say, ‘I am running a vertically integrated homeownership services company.'”


Send tips or a Letter to the Editor to or call (510) 658-9252, ext. 140.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription