A tug-of-war is heating up over an amendment to the Real Estate Settlement Procedures Act, and mortgage lenders are finding themselves at both ends of the rope.

Last week, Henry G. Cisneros, secretary of housing and urban development, sent a letter to Rep. Jim Leach, chairman of the House Banking Committee, opposing an amendment that would roll back a HUD rule banning referral fees in mortgage transactions. That rule is to take effect Oct. 7.

"HUD carefully developed its revisions to the 1992 rule, after almost four years of weighing competing views," Mr. Cisneros' letter reads in part. "Legislation on this controversial issue should not be tacked on as a bill goes to the floor in a last-minute rush."

Monday, the Consumer Mortgage Coalition, a young trade group that has been highly active in the debate, sent representatives and senators a letter stating that HUD's pending rule would disrupt the mortgage industry.

The Respa-related parts of Rep. Leach's amendment are supported by the American Bankers Association, American Financial Services Association, Consumer Bankers Association, National Association of Realtors, and Real Estate Services Providers Council.

The Mortgage Bankers Association of America, the principal mortgage trade group, supports most of HUD's new Respa rule, seeing it as proconsumer.

HUD's rules would place several limitations on referrals, including making it illegal for employees to get compensation for referrals to affiliated real estate service companies.

Real estate and mortgage industry representatives have spent long hours in the past week and a half scrambling to negotiate the wording of Respa amendments that are attached to legislation shoring up the Savings Association Insurance Fund.

The act, which was designed to prevent kickbacks in real estate transactions, has been perceived as a thorn in the side by many mortgage lenders, who complain that the rules to implement the law are ambiguous.

Unlike the House version of the amendment, language circulating in the Senate would allow referral payments to anyone as long as they are disclosed, people close to the drafting process said.

Employee referrals are crucial to large affiliates involved in the home lending business, some industry representatives said.

Anne Canfield, executive vice president of the Consumer Mortgage Coalition, wrote last week to Nicolas Retsinas, assistant housing secretary: "Compliance with HUD's new rule will make it virtually impossible for multi-affiliate companies to compensate their employees, as well as frustrate legitimate efforts to cross-market and deter efforts to streamline the homebuying process."

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