Complaints of kickbacks by home lenders to real estate brokers are skyrocketing, according to the Department of Housing and Urban Development.
But HUD is getting little of the cooperation it needs from state regulators to enforce the Real Estate Settlements Procedures Act, a top HUD official said.
Only New Jersey, Minnesota, and Illinois have come out swinging on HUD's behalf and moved to crack down on lenders who pay off real estate brokers for referring borrowers to them. HUD wants other states to pitch in.
"Many states perceive themselves as not having the responsibility (to help enforce Respa), and that is not the case," said David R. Williamson, HUD's director of Respa enforcement. States are not required to assist in federal investigations. But because many state laws overlap Respa regulations, states should contribute resources, Mr. Williamson said.
Mr. Williamson said Respa violations had soared in the last six months. Since October, HUD has gotten 141 requests for investigations regarding illegal controlled-business arrangements. HUD got 156 requests for investigation for the entire year ended October 1994.
HUD is now asking states to do investigations on its behalf - a request not particularly appealing to state regulators.
"They can say whatever they want," said Thomas L. Pool, deputy real estate commissioner for the state of California. "We don't have jurisdiction."
HUD receives most grievances about illegal CBAs from California, Texas, and Florida. Officials in these states say they do not help federal regulators investigate Respa violations.
Mr. Williamson agreed that states were not required to help HUD.
"It is out of their jurisdiction in the sense that they cannot take the action that we can," he said. "But they certainly can utilize some of their resources to help in investigations."
Mr. Williamson said HUD's task would be greatly reduced if each state took on 10 to 15 investigations per year.
"Everybody likes to pass the buck, don't they?" said Betty R. Ludeman, assistant commissioner in charge of enforcement for California.
Mr. Williamson's call for more state participation comes as Congress is considering taking the responsibility to enforce Respa away from HUD and giving it to the Federal Reserve.
Illinois has come out strongly against Respa violations. Jack R. Schaffer, Illinois commissioner of savings and residential finance, has sent out two letters since February warning mortgage lenders licensed by the state to be more aware of Respa regulations and how they overlap state law.
Mr. Schaffer said the letters were in response to the "large number of complaints" his office has been receiving - 60 of a serious nature in the last nine months.
"An awful lot of what appears to be going on is not legal," he said.
