An unlikely coalition of lenders, mortgage brokers, realtors, and consumer advocates is scheduled to kick off two days of talks here this morning on how to reform mortgage disclosure rules.

The Mortgage Reform Working Group is composed of 31 participants including most of the national banking trade organizations, the American Association of Retired Persons, Consumers Union, and individual lenders like Money Store and Bank of America.

This group of diverse interests faces the daunting task of quickly negotiating an agreement on overhauling the Real Estate Settlement Procedures Act, or Respa, and the Truth-in-Lending Act.

(Federal regulators are also working on a plan, due to Congress by the end of March. Whether regulators and industry leaders will work together or push separate proposals is still unclear.)

The outcome of this week's meetings will go a long way toward determining if Congress can pass reform legislation in 1998.

Key lawmakers such as Rep. Rick A. Lazio, R-N.Y.-chairman of the House Banking subcommittee, with jurisdiction over Respa-last year warned industry and consumer representatives that reform efforts would be dashed unless they developed a joint reform proposal.

"If we are able to get a consensus early in the term, then there is a better-than-even chance we can get this passed this Congress," said Kirk G. Willison, director of government and public affairs for Countrywide Home Loans Inc. and the group's organizer. "If we are stumbling and struggling with a consensus, it could be very difficult."

Most appraisals from within the group were wary.

"The talks are progressing," said Frank C. Torres, legislative counsel for Consumers Union. "We are struggling on a consensus ... It has been a long process and continues to be a long process."

The group may splinter before an agreement can be reached, warned Margot Saunders, managing attorney of the National Consumer Law Center.

Numerous hurdles exist.

Many participants are concerned that the 1998 elections will shorten the congressional session and distract lawmakers.

The long-standing obstacle remains whether members of the financial industry and consumer organizations can work out a mutually satisfactory agreement.

Consumer groups want better, more timely disclosures on interest rates and closing costs that allow consumers to shop for home loans. Lenders want to cut red tape and exposure to lawsuits.

Robert A. Cook, a partner with the law firm Hudson Cook LLP in Crofton, Md., who specializes in consumer financial issues, said many technical pitfalls exist such as clarifying penalties for lenders that pay kickbacks to mortgage brokers.

Banking trade groups already are raising red flags.

"The initial response of many bankers to the proposals was skepticism about their improving the lending process and concerns about the potential cost of the regulatory burden," American Bankers Association chief lobbyist Edward L. Yingling wrote Fed and Department of Housing and Urban Development officials in mid-December.

For instance, some participants want closing costs to be specified up front and the annual percentage rate revamped, said Nessa E. Feddis, senior federal counsel for ABA. Changing the APR would create "enormous" software and re-training costs for lenders, she said.

Instead, banks would consider setting closing costs at the outset if the APR were eliminated, Ms. Feddis suggested.

Banking groups say they do not want to be rushed.

"We ... do not wish to force an artificial consensus only to watch it fall apart," Joe Belew, president of the Consumer Bankers Association, wrote the agencies last month.

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