This is true free enterprise rather than the Realtor's spin doctor's version on RESPA that translates into freedom to use my influence over buyers that are effectively a captive market to create as many ways possible to generate fees or steer them into only a few sources of mortgages.

WHO ARE THE POWER BROKERS?

The owners and managers of the real estate companies, especially the larger ones, who stand the most to gain by creating a business tie with a lender and the overall trend in the industry of consolidation of services and real estate companies.

The Power Brokers are also a privileged class within the ranks of the Realtors, the worlds largest, wealthiest and perhaps most powerful trade group of some 820,000 members. In short, what government and press hears from the Association is really the agenda of a powerful minority of businessmen.

THE SINKING S&L SHIP AND REALTOR TORPEDOES

The S&L's have suffered serious injury through the loss of business when agents steer buyers into lenders that are affiliated with their real estate company. Because S&L's are not allowed to provide or own real estate agent companies, they are playing on uneven ground. I, as a practicing agent, have for years watched S&L's with good mortgage rates and products passed by when agents steered buyers into their company's business related lender even thought the buyer would be paying more for their mortgage and/or receive poorer service.

Approximately one third of all real estate companies are owned by five or six of the national giants and this consolidation trend is rapidly increasing. What we must realize also is that the largest real estate organizations are often ultimately owned by financial service giants.

Realtors want to allow lender referal fees which will mean that the huge commercial banks and financial services groups will easily be able to out bid and out flank the S&L's for the highest payoff to agents for steering and "servicing" buyers.

CONCLUSION

Real estate agents are licensed as brokers to THEORETICALLY bring high standards and safeguards for consumers, real estate values and the banking engine of our economy that is largely fueled by mortgages. These fiduciary protections and concepts of agent relationships are centuries old and their endurance is testimony to their golden value. The compass to accurately navigate your RESPA questions is made by the nearly universal laws of agency. Your map is an accurate understanding of the unwritten rules and real life agent motivations behind the scenes of the act of consumers buying property and buying the right to use another person's money via a mortgage.

It is time to apply a great and costly lesson of the S&L disaster that conflicts of interest are a root of economic evil. The Realtors and Citicorp are in essence asking the American Congress to sanctify and encourage the illegal and slow but sure acid of corruption that dual agency relationships precipitate. The right answers come from asking the right questions and I leave you with this acorn of a thought, I hope will grow into a mighty oak of consumer and banking reforms:

WHY ARE REAL ESTATE BROKERS ALLOWED ANY OWNERSHIP AND BUSINESS INTERESTS IN MORTGAGE BANKING IN THE FIRST PLACE?

Thank you for listening and learning from my experiences for the benefit of consumers and true real estate professionals everywhere.

James ARROW

James Arrow

REGULATING CLOS AFTER A DECADE OF RESPA VIOLATIONS

By

James Arrow / Buyer Protection Realty

For

Subcommittee on Housing and Community Development

Of The

Committee on Banking, Finance and Urban Affairs

The question of the best ways to integrate CLOS first begins with learning why consumers are unnecessarily paying billions more for housing costs due to existing widespread RESPA violations and then seeks ways to structure CLOS that will stem existing opportunities for anticonsumer lending practices.

The advancement of technological benefits for tradespeople and consumers should of course be facilitated as much as possible by government SO long as the necessary consumer and banking safeguards remain under the complete and responsive control of government. CLOS systems offer tremendous potential for consumers to receive improved service, sophisticated loan analysis and cost savings generated from genuine free market competition. Conversely, the opportunities for consumer abuses and anticompetitive schemes to be fueled by improperly regulated CLOS are equally great.

This writing looks at RESPA from four aspects of the CLOS issue:

1

• Outline of CLOS regulations to insure consumer protection

2

3

Why and how RESPA was been violated for the past decade

• HOW laws of agency safeguard consumers and impact RESPA

4 • CLOS after government divestiture of Realtor/MLS Cartel

The following suggestions on and discussion of CLOS and RESPA will help to assemble the whole truth from the bits and pieces of half truths that have been manufactured in mass after years of heavy and expensive lobbying by America's wealthy and solely profit motivated Realtors and mortgage financial giants.

1

• Outline of CLOS regulations to insure

consumer protection

In all potential scenarios for providing CLOS for profit to consumers through real estate brokerage sales offices where brokers and their sales associates are involved in the property transaction, there are always legitimate legal conflicts of agency duty and obligations. The only exceptions are in the few possible times where the CLOS fee could be waived entirely or when a CLOS origination as only a one time service by a broker/agent without any other sales transaction involvement with the parties. These conflicts of interest and the opportunities they create for consumer manipulation and misdirection in loan selections range from serious, to less probable and eventually to the least troublesome possible.

occurs

Are we going to erode the consumer safeguards against conflicts of interest that agency law creates and that RESPA to date has, only in theory, provided just to accommodate CLOS? Or put in a more positive perspective, can we structure CLOS in a way that creates the least possible breakdown of agency and RESPA consumer safeguards as a sacrifice that offsets the CLOS' revolutionary benefits and growth potential?

The later question focuses the regulatory priorities. With my expertise in brokerage, agency relationships, legal and industry trends, and especially a consumer oriented perspective, I can honestly envision a CLOS regulatory framework of healthy compromises and incentives.

Furthermore, if the following 12 key proposals for structuring CLOS systems are all enacted at once, they will fairly and synergistically accelerate the proliferation of CLOS and thus generate greater genuine free market competition among all the lending sources in a local home buying marketplace than has ever existed before.

Neither of the opposing sides of this Realtors/Citicorp vs MBA battle will agree with my proposal in toto: neither one of them have, nor can be expected to have, the consumer's or the truly fair marketplace's best interests at heart, as they claim in their public relations campaigns. CLOS will, I predict, dominate the entire industry by the end of this century and be an important and surprising factor of competition in the banking industry. The future decade is shaping up as one of tremendous consolidation of the American banking industry on all fronts as it becomes more global. CLOS will also become the outlet network for foreign money to electronically plug into and electrify the future of competition for the mortgage money that America barrows and pays back many times over.

I implore HUD and Congress to stand patiently and uncompromisingly for the consumer and against most of what the powerful Realtors want through this now long and contentious industry battle over RESPA/CLOS revisions. Literally trillions of dollars in residential mortgage originations will take place in America over the next decade. Errors by HUD and Congress in structuring CLOS regulations today will cost homeowners billions over time. Conversely, the Federal regulations from today's reformed HUD that are visionary and divorced of the Realtor's powerful lobby influence will unquestionably produce savings to America's citizens that will many times over make up for the billions in losses from recent HUD mismanagement.