A little-publicized proposal that is expected to become a provision of Pennsylvania's new Mortgage Bankers and Brokers License Act is being hailed as a national breakthrough in some quarters and, in others, as a blow to consumers and free markets.

The law went into effect June 22 and requires licensing and regulation of many mortgage lenders and brokers not previously covered.

However, much of the focus now is on a proposal that limits compensation to real estate agencies for mortgage-loan services they provide to home buyers.

The Pennsylvania Real Estate Commission, acting as directed by the law, held hearings and meetings in the spring and set the limit at $100. The proposed limit must go through a complex regulations process before becoming part of the law and probably will not go into effect until early next year.

The proposal also requires that an agency's fee be "for actual services rendered" -- not just a referral to a lender -- and that real estate agencies advise borrowers of any relationship with specific lenders.

In general, mortgage bankers are pleased about the $100 fee provision, but the real estate faction is not.

The bankers believe that the fee limit will put a crimp in the operations of real estate agencies that provide point-of-sale financing or one-stop service. Some agencies, the bankers said, steer home buyers to lenders that offer the biggest fees and paybacks to agencies but do not necessarily have the best consumer terms and interest rates. The charges or fees are generally paid to agencies by lenders but show up in the ultimate cost of the mortgage to the consumer.

The National Association of Realtors said it opposes referral fees but thinks that real estate agencies should be better compensated if their services include matching home buyers and mortgages by so-called point-of-sale financing. Some real estate experts also think that the concept of one-stop service, which lets home buyers take care of all their buying needs, including mortgage loans at the same office, is the key to success and progress for their industry. "We're committed to the concept that we should be paid for services," said Bill North, the NAR's executive vice president. "Clearly $100 doesn't relate to anything," he said. A real estate agency "can spend $500 doing comprehensive mortgage processing and be restricted to charging $100. That's the ultimate form of price-fixing and, from the consumer's standpoint, it's unfortunate.

"The state of Pennsylvania {is} deciding the value of services rendered is irrelevant. It's a strange approach," he said.

Spokesmen for mortgage bankers sang a much happier tune about the proposed fee limit.

"This is certainly the most aggressive of state laws in the nation," said Patrick J. Aritz, president-elect of the Pennsylvania Mortgage Bankers Association and head of Avstar Mortgage Corp. in King of Prussia. "If the spirit and intent is enforced, it will address a serious problem and perhaps serve as a signal. The biggest thing is that it will help let the public be aware there is a cap. It might cause {real estate brokers} to think twice about charging those fees."

Ronnie Wynn, a Montgomery, Ala., mortgage banker who is president of the Mortgage Bankers Association of America, called the fee restriction "a particularly significant piece of legislation" because of "a large amount of referral-fee business going on" in Pennsylvania.

Pennsylvania's new law als requires mortgage bankers and mortgage brokers to obtain state licenses.

Mortgage bankers lend money for mortgages, and brokers negotiate or place loans for lenders. A mortgage banker or broker must also post a $100,000 bond to help protect consumers in case he or she goes out of business and refund upfront fees paid by consumers if mortgages are not delivered as promised.

Mortgage bankers and brokers will be exempt from the $100 fee limit, which has spurred a flurry of license applications from real estate brokers to the state Department of Banking, which administers and enforces the new law. Penalties for violating the law include $2,000 fines and revocation or suspension of licenses.

Harvey Levin, a Philadelphia appraiser who is chairman of the Real Estate Commission, thinks that the $100 cap "may not be the big deal the MBA made it out to be" because of exemptions such as that given to licensed mortgage brokers. "What impact it has on the industry remains to be seen," Levin said. "Our concern is that additional costs not be passed on to consumers."

The lenders want a general tightening of laws, including the federal Real Estate Settlement Procedures Act, to curb mortgage-fee charging by real estate agents.

According to the Mortgage Bankers Association, only about five states besides Pennsylvania have laws regulating referral fees and five others have pending legislation.