Pub. 7 2012-2013 Issue 5

www.nebankers.org 14 Extraordinary Service for Extraordinary Members. Blue Cross and Blue Shield of Nebraska is an Independent Licensee of the Blue Cross and Blue Shield Association. nebraskablue.com for the road ahead. Count on us optional use, and return on ownership interest conditions to the exemption. Common Pitfalls Some of the more common compliance issues with affili- ated business arrangements include the following: • use of “shared” employees among co-venturers and the af- filiated business arrangement; • no true “separateness” of the affiliated business arrange- ments from the co-venturers (e.g., shared office space and phone lines, no separate identification of the affiliated business arrangement on office signage or nameplates); • outsourcing of substantial services by the affiliated business arrangement to a co-venturer; • offering of incentives by co-venturers to customers for use of the affiliated business arrangement (including penalties for failure to use the affiliated business arrangement); • no outside marketing of products by the affiliated business arrangement (i.e., reliance on captive referral source for all business); • inadequate disclosure of affiliated relationship by partici- pants at the time of referral; and • in the case of an affiliated business arrangement which originates or brokers mortgage loans, an agreement on the part of a co-venturer to indemnify or otherwise compensate the affiliated business arrangement for defaults with respect to the loans. As the foregoing suggests, there can be substantial costs incurred in ensuring that an affiliated business arrangement constitutes a bona fide settlement service provider and oth- erwise operates in compliance with RESPA. As Dodd-Frank continues to evolve, these compliance costs are only likely to increase. In certain circumstances, the volume of business conducted through these affiliated business arrangements may not justify these costs and it may prudent to instead pursue alternative agreements, such as marketing or access agreements. Z 1 See 24 CFR Part 3500. 2 12 U.S.C. § 2607(a). 3 12 U.S.C. § 2602(7). 4 24 CFR § 3500.15(b). 5 24 CFR § 3500.15(b)(3)(ii). 6 Statement of Policy 1996-2, 61 Fed. Reg. 29,258, 29263 (1996). 7 Statement of Policy 1996-2, 61 Fed. Reg. 29,258, 29263 (1996). 8 See, e.g., Example 3 from Statement of Policy 1996-2. 61 Fed. Reg. at 29263. For more information, contact Aaron Johnson at Husch Blackwell LLP at (402) 964-5023 or aaron.johnson@ huschblackwell.com. Johnson is a partner in Husch Blackwell LLP’s Banking & Finance Department, where he concentrates his practice in the areas of commercial lending, structured finance, and regulatory compliance. Q RESPA — continued