Mortgage lenders in Southern California say some real estate agents have been demanding illegal kickbacks - in unprecedented numbers and amounts.

The problem has become so severe that the usually close-mouthed industry is going public with the issue and has formed a task force to deal with it.

The demands reportedly range from $500 for the referral of an average loan to $25,000, up front, to begin a relationship.

Such payouts inevitably result in higher costs for borrowers, experts say, and immigrants can be especially vulnerable. Weak enforcement by the federal government contributes to the problem, lenders add.

Market conditions might also be a factor. Because few people are refinancing now due to market conditions, lenders are heavily dependent on business from home buyers - a market in which realty relationships are often decisive.

The newly appointed head of the California Mortgage Bankers Association task force, Kevin Budde, says loan officers have come forward with reports of egregious violations of the Real Estate Settlement Procedures Act. Real estate agents and brokers, he says, are making the first moves.

One loan officer, who asked not to be identified, said that when nationwide real estate chain opened an office in Southern California, he was approached by a broker and sales manager.

"They took me to lunch, saying they had a proposal for me," he said. "Then they told me that they wanted $25,000 up front if I wanted to do business with them."

Another example: a Los Angeles mortgage broker is reportedly aying the rent for a real estate agency in return for exclusive rights to the agency's loans, according to the loan officer.

Mr. Budde, an executive vice president with Temple-Inland Mortgage Corp., said such demands were extreme, but giving a real estate agent half a point for a customer referral was a standard practice.

In the past, more modest inducements - such as cruise tickets - were reportedly common. For their part, real estate agents say money is often offered by loan officers trying to drum up business.

The lenders say individuals at nationally franchised real estate offices, including Century 21, have been among the offenders. A spokeswoman for Century 21 said the chain expects all its agents to follow a code of conduct, but did not say whether the company was investigating.

Mr. Budde, citing what he called poor enforcement by the Department of Housing and Urban Development, has offered to pay the salary of a special Respa enforcer for Southern California.

In Washington, HUD said it has seen more complaints of Respa violations from California recently, but attributed them in part to its stepped-up educational efforts in the area. The agency has been working with the Department of Real Estate and the state insurance agency to enforce Respa while educating those affected.

"One of our foremost concerns is to try not to do 'gotcha enforcement,'" a HUD official said.

The illegal transactions are almost impossible to document because they are conducted behind closed doors and almost always in cash. Unless the agent and mortgage lender have set up a controlled business arrangement, the fee is not disclosed to the borrower.

A mortgage industry consultant in Northern California with 30 years' experience concurs that kickbacks have been increasing in recent years. Lack of education and enforcement are to blame, he said.

Some real estate agents who ask for a referral fee "don't even realize that they're doing something wrong," he said. The public's ignorance of the problem also contributes, he said.

Mortgage lenders who refuse to pay the illegal fees are being shut out of the business, the consultant said: "They have to either play ball or die."

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