FHFA bans private transfer fees
Published: March 22, 2012
Time posted: 2:43 pm
The Federal Housing Finance Agency has ruled that Fannie Mae, Freddie Mac and the Federal Home Loan Banks will no longer be allowed to purchase mortgages on properties saddled with fees that developers insert into covenants for new subdivisions.
The so-called private transfer fees require those who sell their properties to pay a percentage of the selling price to the original developers each time the property changes hands.
Such fees have critics, who say they are not good for consumers. The National Association of Realtors is among those applauding the new rule.
“NAR has long been vocal in its opposition to private transfer fees since there is virtually no oversight on where or how 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, and this often places an inappropriate drag on the transfer of property,” NAR said in a press release last week.
The new rules do not apply to private transfer fees paid to homeowner associations, condominiums, cooperatives and tax-exempt organizations that use the fees to benefit the property. For more information, go to fhfa.gov/webfiles/23493/PrivateTransferFeesFinalRule31412.pdf.