What is the purpose of the Referral Disclosure Document?

The Referral Disclosure Document serves a specific purpose in the mortgage process, which is to disclose referral information. This means it provides transparency regarding any compensation or benefits that the lender or broker may receive from third parties as a result of recommending services, such as title insurance, home inspections, or legal services, to the borrower. The intent is to ensure that borrowers are fully aware of any potential conflicts of interest that might arise from these referrals, allowing them to make informed decisions about their mortgage and associated services.

Providing this disclosure is essential because it reinforces ethical practices within the mortgage industry and protects consumers by ensuring they have all relevant information regarding any financial incentives that may influence the advice or services being offered to them. This clarity helps maintain trust in the lender-borrower relationship.