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Realtors back new FHFA proposal on transfer fees

February 9, 2011 - The Federal Housing Finance Agency has proposed a new rule that would restrict a controversial real estate fee, a move that real estate agents said would only help those hiring moving companies and contemplating a home purchase.

The agency proposed restricting Freddie Mac, Fannie Mae and the Federal Home Loan banks from working with mortgages on properties containing private transfer fees. The covenants are normally attached to a property by a developer or, more commonly, a third-party firm. In most scenarios, a seller is required to pay 1 percent of the home's value to the developer and firm each time the home is sold over a period of 99 years.

Opponents argue the fees add nothing of value to the property and can actually hinder home sales. The FHFA's rule did not include fees imposed by homeowners' associations or condo groups, which the agency said actually benefit their properties.

"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.

Anne Anastasi, president of the American Land Title Association, also said private transfer fees can complicate the transfer of property from seller to buyer, holding up real estate transactions and sometimes nixing moving plans all together.
 

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