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.

HUD has asked for comment on whether CLOs should be better defined. It also wants to know if consumers are protected by the disclosure rules.

Both the MBA and the consumer groups will ask the agency to ensure that the CLOs list the rates of many lenders.

Both also will ask that no referral fees be paid for CLOs.

"If there's going to be a fee, it should be disclosed and paid up front," said Warren Lasko, the trade group's executive vice-president.

Tough Language

Mr. Lewis expects to tell the lawmakers that the bonuses to realty employees "look and smell like kickbacks."

But what smells like a kickback to MBA and Mr. Lewis looks like good business to the Realtors association. It says it will fight hard to keep the rules.

"What we'd like to do is suggest that CLOs are the wave of the future," said Norman D. Flynn, who was president of the group in 1990 and will testify Friday.

"We ought not to be putting artificial barriers in the way of technological advancement that will assist purchasers in finding the best, most suitable loan for them," Mr. Flynn will tell HUD.

Mr. Lewis and the mortgage bankers draw heart from the very fact that HUD called a hearing, and from the the consumer-oriented questions in the agency's hearing notice.

"Our understanding is that the secretary's office is not pleased to be in litigation with the CFA," said Mr. Lewis.

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