REALTORS® Praise FHFA for Proposed Rule to Prohibit Private Transfer Fees

On Tuesday, January 25, HAR was awarded Business of the Year at the Greater Houston Women’s Chamber of Commerce Awards Luncheon. Pictured are 2009 HAR Board of Directors Chair Vicki Fullerton; Susie Hale, President of FrogPond; HAR Chief Political Strategist Dana Kervin; 2010 GHWCC Board Chair Dr. Mary Ann Reynolds Wilkins; and 2010 HAR Board of Directors Chair Margie Dorrance.

The National Association of REALTORS® (NAR) applauds the Federal Housing Finance Agency (FHFA) 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.”

In preparing for the Sugar Land City Council elections in May, HAR Governmental Affairs leadership joined Sugar Land City Council Member Jacquie Baly Chaumette (center) for a luncheon at La Griglia Restaurant in Houston. Pictured (from left to right) are: HAR Chief Political Strategist Dana Kervin, HAR Governmental Affairs Coordinator Lindsay Munoz, 2011 Fort Bend PAAL Chair Vicki Warren, HAR Governmental Affairs Administrative Coordinator Jamie Honeycutt, 2010 Fort Bend PAAL Chair Jim Cockrill, Sugar Land City Council Member Jacquie Baly Chaumette, HAR Secretary/Treasurer Nancy Furst, Governmental Affairs Advisory Group State and Federal Issues Chair Mario Arriaga, HAR Branch Manager Rhonda Flowers, Political Affairs Advisory Group Chair A. David Schwarz III.

The proposed rule would allow for private transfer fees paid to some home owner, condominiums, and cooperative associations. “We understand that FHFA believes that some private transfer fees have a legitimate place in real estate markets, and support their decision to exempt certain organizations from the proposed ruling where there may be a direct benefit to the home owner; however, FHFA must ensure that the fees paid are reasonable and fully disclosed to home buyers well in advance of closing,” said Phipps.

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.

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries. Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section.