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