NAR Hails Proposal to Restrict GSE Mortgages with Private Transfer Fees

Washington, August 13, 2010 (Realtor.org) The National Association of Realtors® today commended the Federal Housing Finance Agency for taking steps to restrict government-sponsored enterprises – Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks – from investing in mortgages with private transfer fee covenants.

A private transfer fee, often attached to a property by a developer, is a fee due to the developer each time the property is resold. The term of some covenants can extend for 99 years. NAR is a leader of a coalition that strongly opposes such fees.

“NAR is the leading advocate for private property rights and housing issues and we firmly believe that private transfer fees add an unnecessary burden to the real estate transaction and can delay a closing or even kill the transaction. There is no service performed for such fees and they add nothing to the value of a property,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates, Tucson, Ariz. “FHFA is to be commended for proposing a guidance that would ban this unnecessary fee.”

FHFA, as required by law, has sent a Notice of Proposed Guidance to the Federal Register for publication and seeks public comment on its proposal. The public comment period on the proposed guidance will be open for 60 days after the notice is published.

Twelve states enacted legislation in 2010 that ban private transfer fees. They are Arizona, Delaware, Hawaii, Illinois, Iowa, Maryland, Louisiana, Ohio, Mississippi, Minnesota, North Carolina and Utah. A growing number of other states have indicated they are considering similar actions.

The Federal Housing Administration has also denied its home loan programs to transfer fees.

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.

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