Industry News

Ohio backs off tighter limits on real estate partnerships

State heeds industry objections to 10% ownership cap in affiliated title cos.

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Ohio officials are drafting new regulations governing affiliated real estate business arrangements, but have backed away from tightening restrictions on how much of a stake real estate and mortgage brokers can own in title insurance agencies. Affiliated business arrangements, or ABAs, are legal, but investigations in several states have turned up instances in which they were allegedly used to facilitate the illegal payment of referral fees and kickbacks to generate business for affiliated title insurance companies, stifling competition. In Ohio, where consumers have sued a number of companies that use such arrangements, the Department of Insurance is drafting new restrictions on ABAs. One early draft of the new rules would have prohibited real estate mortgage brokers, builders and developers from owning more than 10 percent of a title insurance company. But the latest draft of the rules would maintain the current limit of 50 percent. The latest draft is an apparent response to indus...