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.
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