Magazine article American Banker

Bankers, Realty Agents Gird for Clash on Fees

Magazine article American Banker

Bankers, Realty Agents Gird for Clash on Fees

Article excerpt

WASHINGTON -- Mortgage bankers and real estate brokers will square off again Friday over some federal rules aimed at combating kickbacks for loan referrals.

Both sides, as well as consumer advocates, will testify at a hearing at the Department of Housing and Urban Development about regulations to implement a 1983 amendment to the Real Estate Settlement Practices Act of 1974.

The Mortgage Bankers Association wants the rules overturned and has lobbied HUD as well as bringing suit in federal court. And the National Association of Realtors and other real estate groups are fighting to keep them in place.

"These are big gorillas that are in the playpen together. There's no way to take on this decision without rattling the cage," said Chris Lewis of the Consumer Federation of America.

In an unusual alliance with mortgage lenders, Mr. Lewis' group will also tell HUD to go back to the drawing board.

It is a measure of the difficult politics of this issue that the agency did not issue final rules for the 1983 amendment until election eve last year.

The timing left the new housing secretary, Henry Cisneros, and on the opposite side from consumer groups on a touchy matter.

Two issues will be on the table.

* The rules allow real estate agents to ear referral fees when they use a computerized loan origination (CLO) system to help homebuyers shop for a loan, so long as the shoppers are told about the arrangement.

* Realty employees are allowed to earn fees or bonuses if they refer homebuyers to a lender owned by the same company as the realty broker. …

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