John A. Tuccillo, chief economist of the National Association of Realtors, said in an interview with The Mortgage Marketplace that the new Respa regulations will encourage competition in the real estate finance industry. Moreover, he said the consumer is protected by disclosure requirements. MMP: Mortgage bankers and brokers have complained that the controlled business arrangement provision are a strong incentive to act on a conflict of interest and steer business to affiliates of real estate brokerages. What is your view? Tuccillo: I think the full disclosure of affilliate relationships required under the regulation will provide enough protection for the consumer. MMP: Then why are the mortgage bankers and brokers so upset? Tuccillo: They don't want more competition. No one likes more competitors, but that's the way capitalism works. Because some real estate finance industries are thinly capitalized, they are easily open to new entrants.

The mortgage bankers and brokers wanted a rule that would inhibit new entrants. What we got was a rule that encourages them but specifies the rules of the game. MMP: Will the CBA rules result in significant changes for real estate brokerages? Tuccillo: You won't see any rapid changes. Real estate firms are typically thinly capitalized, so you're not dealing with corporations who have deep pockets. MMP: What are the implications of the fact that computer loan origination systems can be limited to a single lender? Tuccillo: Not very significant. In a competitive world, we're not going to see the survival of single-lender CLOs. A single-lender CLO can thrive only when it provides a significantly higher level of service.

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