Which of the following best defines an Affiliated Business Arrangement (AFBA)?

An Affiliated Business Arrangement (AFBA) is best defined as a relationship where a person can refer services to a company they own. This definition aligns with the purpose and nature of affiliated business arrangements, which typically involve a real estate professional, lender, or settlement service provider referring clients to a business they have a financial interest in. This type of arrangement must be disclosed to the client to maintain transparency and comply with regulations, but the central focus is on the referral relationship that arises from shared ownership or partnership.

In contrast, partnerships between lenders and government agencies primarily pertain to collaborative efforts for programs and funding, which is a different concept. The option regarding obtaining lower interest rates for borrowers does not capture the essence of an AFBA, as they do not inherently guarantee better loan terms. The fourth option about disclosing all real estate transactions does not accurately reflect the specific definition of an AFBA since it is focused on the referral relationship rather than a requirement for disclosure in all transactions.