The recent round of lawsuits against wholesale mortgage originators is one of the most pressing concerns mortgage banks have to face, an officer of the mortgage industry's trade group said.

Marc C. Smith, president-elect of the Mortgage Bankers Association of America, spoke about the issue in a state-of-the-industry address that opened the MBA's chief financial officers conference. Mr. Smith is president and chief executive officer of Crestar Mortgage Corp., Richmond, Va.

Crestar is one of more than 70 mortgage banks that are currently named in class actions over alleged violations of the Real Estate Settlement Procedures Act, or Respa.

The litigation revolves around whether fees paid to brokers, known as yield-spread premiums, are legal. These premiums are paid by wholesale lenders when they buy loans at above-market rates.

Mr. Smith defended the industry's practice of paying the fees, saying that they are not kickbacks. "The allegation, in my view, is so preposterous it quickens the pulse," he said.

Mr. Smith said it was nearly impossible for smaller originators to be profitable if they have to rely only on the fees they get at the closing.

Court rulings have so far been mixed but observers say legal opinions seem to be tilting in favor of the lenders. A federal district court in Virginia refused a request by Crestar and another accused lender for a summary dismissal on some of the charges. But an Alabama district court ruled in favor of lenders, saying the fees they paid were for a transfer of "goods" and thus were not kickbacks.

An executive with one small lender said his company was keeping a close watch on how the suits play out in the courts.

"The litigation is scary," said Irvin E. Klein, controller for First Home Mortgage Corp., a Millersville, Md.-based mortgage bank.

Mr. Klein said his company was primarily an originator that passes loans on to wholesalers and does not service any of the loans it funds. He added that servicing released and yield-spread premiums is what enables small lenders like his to make money.

Such premiums often arise when the borrower agrees to a higher interest rate in exchange for the elimination of up-front fees.

Mr. Smith said the only thing worse than the fact that such a large number of companies are having to defend against these suits is that some are settling, and at great cost. He insisted that the Department of Housing and Urban Development must issue some sort of concrete clarification of Respa in order to keep the issue out of the courts.

"Standard disclosure will ameliorate the class action exposure," Mr. Smith said.

Class action lawyers, meanwhile, have vowed to press their cases in state courts if they are stymied in their federal actions.

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