Pleasanton Weekly

Real Estate - February 11, 2011

Realtors praise FHFA rules to prohibit private transfer fees

Proposed rule could decrease affordability with no benefit to buyers, NAR says

by Jeb Bing

The National Association of Realtors has applauded the Federal Housing Finance Agency for moving ahead with a proposed rule to restrict government-sponsored enterprises Fannie Mae and Freddie Mac and the 12 Federal Home Loan Banks from investing in mortgages encumbered by private transfer fee covenants.

NAR has long been vocal in its opposition to private transfer fees, which are often attached to a property by developers and require payment of fees back to the developer each time the property is resold; the covenants can be difficult to reverse and may be attached to a deed for up to 99 years.

"As the leading advocate for home ownership, we commend FHFA for the proposed rule to ban private transfer fees, which we believe often decrease affordability, negatively impact equity and provide little benefit to property purchasers," said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. "FHFA is taking the necessary steps to ensure that these fees are no longer used to simply generate revenue for investors and private developers."

The proposed rule would allow for private transfer fees paid to some homeowner, condominium, and cooperative associations.

"We understand that FHFA believes that some private transfer fees have a legitimate place in real estate markets," said Phipps. "We support their decision to exempt certain organizations from the proposed ruling where there may be a direct benefit to the homeowner. However, FHFA must ensure that the fees paid are reasonable and fully disclosed to home buyers well in advance of closing."

According to FHFA the proposed rule would only apply to private transfer fee covenants created on or after the date of publication of the rule.

Since there is virtually no oversight on where or how private transfer fee proceeds can be spent, on how long a private transfer fee may be imposed, or on how the fees should be disclosed to home buyers, as many as 19 states have banned or restricted private transfer fees.

The Federal Housing Administration has also restricted private transfer fees through its home loan programs.

Comments

There are no comments yet for this post

Don't miss out on the discussion!
Sign up to be notified of new comments on this topic.

Email:


Post a comment

Posting an item on Town Square is simple and requires no registration. Just complete this form and hit "submit" and your topic will appear online. Please be respectful and truthful in your postings so Town Square will continue to be a thoughtful gathering place for sharing community information and opinion. All postings are subject to our TERMS OF USE, and may be deleted if deemed inappropriate by our staff.

We prefer that you use your real name, but you may use any "member" name you wish.

Name: *

Select your neighborhood or school community: *

Choose a category: *

Since this is the first comment on this story a new topic will also be started in Town Square! Please choose a category that best describes this story.

Comment: *

Verification code: *
Enter the verification code exactly as shown, using capital and lowercase letters, in the multi-colored box.

*Required Fields