Industry NewsMortgage

Feds move to restrict private transfer fees

Fannie, Freddie would be barred from investing in encumbered loans

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

Federal regulators are moving to ban Fannie Mae, Freddie Mac and the Federal Home Loan Banks from investing in loans with private transfer-fee covenants, a controversial technique for financing the capital costs of new housing developments.A coalition of real estate industry groups and consumer advocates is campaigning for a federal ban, saying the fees -- which are collected each time a home changes hands -- rob homeowners of equity, harm their property's value, and lay the groundwork for legal disputes that threaten smooth property transfers.In a notice to be published in the Federal Register, the Federal Housing Finance Agency (FHFA) agreed, saying expanded use of private transfer-fee covenants "poses serious risks to the stability and liquidity of the housing finance markets."FHFA wants to ban Fannie and Freddie from purchasing or investing in mortgages encumbered by private transfer-fee covenants or securities backed by private transfer-fee revenue.The Federal Home Loan ...