U.S. Moves Nearer Limit on Realtor Fee for Loan Search

The federal government has moved one step closer to limiting the fees that realtors can collect when they let buyers use their computerized mortgage networks.

In a typical scenario, a buyer picks out a home and returns to the realtor’s office to search for a loan. The realtor types several pieces of information into a computer, including the sales price of the home, the down payment and the size of the necessary loan.

The computer then prints out a listing of the different types of loans and terms that are available from lenders who are on the computer’s database.

If the buyer chooses one of the loans, the realtor can charge him a fee and--under certain circumstances--also gets a referral fee from the bank.

This type of arrangement has angered many bankers, who say realtors may be tempted to “steer” the borrower toward the lender who offers the highest referral fee.

They also say that some realtors don’t tell their clients that they’ll be charged a fee for use of the computer. Instead, the buyer finds out the bad news when he gets his final settlement sheet at the close of escrow.

“Agents make enough money from the commissions they charge,” said Mike Ferrell, a lobbyist for the Mortgage Bankers Assn. of America.

“Every time they slap on a fee to use their computer or collect a referral fee from a lender, it directly or indirectly comes out of the home buyer’s pocket.”

The bankers trade group has been locked in a ferocious lobbying battle with the National Assn. of Realtors, whose members don’t want restrictions on how much they can charge.

Now, it looks as if the bankers have won. The U.S. Department of Housing and Urban Development has proposed new regulations that would set a $250 limit on the fees that realtors could levy for use of the systems.

It would also limit fees that realtors can collect when they refer a buyer to a title insurer, lender or property-management firm that is affiliated with the agent’s office.

The HUD plan was recently sent to the Office of Management and Budget, which makes sure that new regulations don’t conflict with the policies of the various government agencies.

Barring any problems, the new rules could go into effect within a month or two.