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The National Association of REALTORS® and SILVAR applaud the Federal Housing Finance Agency’s (FHFA) final rule limiting Fannie Mae, Freddie Mac and the Federal Home Loan Banks from dealing with 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 when transferring the property.

NAR fully supports FHFA’s decision to ban private transfer fees, which it believes increase the cost of home ownership, provide no benefit to home buyers, and do little more than generate revenue for developers or investors. NAR has long been vocal in its opposition to private transfer fees. There is virtually no oversight on where or how the fee proceeds can be spent, on how long a private transfer fee may be imposed. It also often places an inappropriate delay on the transfer of property.

The final rule 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 on February 8, 2011. Covenants created before that date, as well as covenants created after that date pursuant to certain agreements entered into before that date, would be exempted from the rule.

June 2023


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