In a controversial move, the Department of Housing and Urban Development has decided to allow real estate brokers to reap unlimited fees for loan referrals.

Mortgage bankers immediately slammed the long-awaited decision, saying it would allow real estate brokers to receive "kickbacks" for steering customers to lenders.

Trade Group's Criticism

The Mortgage Bankers Association of America, which had been working with HUD to develop a more restrictive rule on referral fees, assailed the regulation as anticompetitive and anticonsumer. The trade group got wind of the action on Tuesday during its annual conference in San Francisco.

The group's leadership said the rule would encourage realty brokers to promote lenders who may not offer the best loan terms. It also accused the administration of shifting course for political reasons.

"The administration should act responsibly and reverse its decision before serious and irrevocable damage is done to the homebuying process," said Herbert B. Tasker, the association's new president.

He called the regulation "a last-ditch effort to gamer election support."

|Sour Grapes,' Says HUD

"To say it is an election ploy is lunacy," countered Alfred Delli-Bove, deputy secretary at HUD.

He accused the trade group of "sour grapes," saying it "wanted HUD to guarantee that the fees be paid only to mortgage bankers. They wanted a comer on the market."

The new rule will be published next week and take effect in December, an agency spokesman said Wednesday.

The issue of referral fees has been contentious in the mortgage industry since Citicorp rolled out a program called MortgagePower in the mid-1980s. The program allowed participating brokers to earn extra fees by sending customers to Citicorp.

Though MortgagePower has been scaled back sharply, other big lenders are thought to be contemplating similar programs.

The trade group believed it had worked out an agreement with HUD that would ban referral fees unless offerings of multiple mortgage lenders were made available to brokers. Its leaders also expected fees to be capped at about $300.

But the final regulation to be published in the Federal Register next week permits single-lender systems and sets no lid on fees, the agency spokesman said. HUD solicited comments on the issue of referral fees in May 1988.

Realtors Satisfied

John Tuccillo, chief economist the powerful National Association of Realtors, took issue with the mortgage group's characterization of the fees as kickbacks.

"Our view is fees for services rendered are perfectly legitimate," he said. "We are not talking about payment for naked referrals."

The forthcoming regulation, a long-awaited clarification of the Real Estate Settlement Procedures Act of 1974, will apply specifically to brokers who are linked to lenders by computer.

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