The Federal Housing Finance Agency (FHFA) has sent a final rule to the Federal Register on private transfer fees.
According to the FHFA, the final rule limits Fannie Mae, Freddie Mac and the
Federal Home Loan Banks from dealing in mortgages on properties encumbered by certain types of private transfer fee covenants and in certain related securities. Transfer fees are contractual arrangements where an owner pays a fixed amount or a percentage of the sales price at the time of transferring the property.
The final rule also excludes private transfer fees paid to homeowner associations, condominiums, cooperatives, and certain tax-exempt organizations that use private transfer fee proceeds to benefit the property. Fees that do not directly benefit the property are subject to the rule, and would disqualify mortgages on the property from being sold to Fannie Mae or Freddie Mac, or used as collateral for Federal Home Loan Bank advances.
With limited exceptions, the rule applies only prospectively to private transfer fee covenants created on or after the date of publication of the proposed rule, Feb. 8, 2011, according to the FHFA. Covenants created before that date, as well as covenants created after that date pursuant to certain agreements entered into before that date, would be excepted from the rule.