The Federal Housing Finance Agency is moving ahead with a rule that prohibits Fannie Mae and Freddie Mac from dealing in mortgages on properties encumbered by "certain" private transfer fees.
A proposed rule, which will become final and take effect 120 days after being published in the Federal Register, would exempt transfer fees paid to homeowner, condominium and cooperative associations as well as certain tax-exempt organizations. But otherwise, Fannie, Freddie and the Federal Home Loan Banks would be barred from dealing in loans on homes saddled with fees that do not directly benefit the property.
With limited exceptions, the rule would apply only prospectively to private transfer fee covenants created on or after the date of publication.
The proposal puts a federal stamp on a process that already has been restricted or banned outright in 19 states, and was hailed by the Coalition to Stop Wall Street Home Resale Fees, a group dedicated to ending the practice. The Coalition maintains the fees steal home equity from consumers, filter money away from communities and community development, infringe on property rights, and interfere with the safe and efficient transfer of real estate.
"We applaud the FHFA for recognizing the dangers of private transfer fees and taking the necessary steps to ensure that this financial scheme does not make further inroads into our country's real estate market," said Kurt Pfotenhauer of the American Land Title Association, a Coalition member.
Revised from previously proposed guidance, the proposed rule will be published sometime this week. After that, interested parties have 60 days to submit comments.
