Magazine article American Banker

Mortgage Bankers Blast Rule Allowing Realty Referral Fees

Magazine article American Banker

Mortgage Bankers Blast Rule Allowing Realty Referral Fees

Article excerpt

In a controversial move, the Department of Housing and Urban Development has decided to allow real estate brokers to reap unlimited fees for loan referrals.

Mortgage bankers immediately slammed the long-awaited decision, saying it would allow real estate brokers to receive "kickbacks" for steering customers to lenders.

Trade Group's Criticism

The Mortgage Bankers Association of America, which had been working with HUD to develop a more restrictive rule on referral fees, assailed the regulation as anticompetitive and anticonsumer. The trade group got wind of the action on Tuesday during its annual conference in San Francisco.

The group's leadership said the rule would encourage realty brokers to promote lenders who may not offer the best loan terms. It also accused the administration of shifting course for political reasons.

"The administration should act responsibly and reverse its decision before serious and irrevocable damage is done to the homebuying process," said Herbert B. Tasker, the association's new president.

He called the regulation "a last-ditch effort to gamer election support."

|Sour Grapes,' Says HUD

"To say it is an election ploy is lunacy," countered Alfred Delli-Bove, deputy secretary at HUD.

He accused the trade group of "sour grapes," saying it "wanted HUD to guarantee that the fees be paid only to mortgage bankers. They wanted a comer on the market."

The new rule will be published next week and take effect in December, an agency spokesman said Wednesday. …

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