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Federal regulator cautions banks on real estate partnerships

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Another government agency appears to be cracking down on affiliated business arrangements among real estate service providers, with the U.S. Office of the Comptroller of the Currency issuing an Aug. 4 bulletin to bank CEOs and compliance officers. "(The OCC) has noted that third parties have approached some national banks to form affiliated business arrangements to offer real estate settlement services," Ann Jaedicke, OCC's deputy controller for compliance policy, wrote in the bulletin. National banks entering into real estate partnerships with third parties must comply with Section 8 of the Real Estate Settlement Procedures Act, known as RESPA, Jaedicke cautioned, warning that "substantial penalties and liabilities" exist for those who do not comply. Section 8 is the principal anti-kickback section of the act. Affiliated business arrangements are partnerships between real estate entities such as title insurance companies, mortgage lenders and real estate brokers. The arrangements ar...