In what many cross-industry leaders in the residential real estate industry hail as a positive development, state legislators and regulators appear to be gradually moving away from laws that restrict one-stop shopping for home buyers and owners.
According to the 2005 Survey of State Affiliated Business Laws published this month by the Real Estate Services Providers Council, no new state restrictions on affiliations between providers from different industries – so-called “anti-affiliation” laws – have been enacted since it published a similar state survey in 2001. In addition, several states have either repealed or modified their anti-affiliation laws.
The survey covers three basic types of state anti-affiliation restrictions: those that restrict affiliations between financial institutions and insurers, those that place percentage cap limitations on the amount of business a title insurer and/or agency can receive from an affiliate (such as a home builder, mortgage lender, or home builder), and miscellaneous statutes.
The trend towards less state regulation in this area is not unexpected, the 2005 survey points out, in view of the presence of a clear federal regulatory framework for affiliated businesses under the Real Estate Settlement Procedures Act (RESPA) that requires a provider to disclose to the consumer any financial interest in an affiliate and prohibits a provider from requiring the use of an affiliated services. In addition, the Department of Housing and Urban Development acknowledged the potential consumer benefits of affiliated businesses in an economic study published in the late 1990s.
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