How big a federal bullet did millions of residents living in communities with homeowners associations just duck?

"Massive," says Andrew Fortin, head of government relations for the Community Associations Institute, which represents 30,000 associations around the country for owners of homes, condominiums and cooperatives.

About 11 million unit owners could have found selling or financing their homes extremely difficult, and as a result their property values would have taken a significant hit, he told me last week.

The bullet in question came from the loaded gun wielded by the Federal Housing Finance Agency, overseer of Fannie Mae, Freddie Mac and the Federal Home Loan Banks. In 2010, FHFA proposed a controversial regulation that would have effectively prohibited Fannie and Freddie from buying or guaranteeing mortgages in communities that imposed deed-based transfer fees on home resales.

Transfer fees of this type — often ranging from 0.25 percent to 0.75 percent of the price of the property being resold — are a traditional method used by homeowners associations to fund capital improvements, property maintenance and other services that directly benefit residents.

Imposition of the fees on periodic resales takes pressure off the association to rely solely on their regular assessments to pay for essential community functions.

The FHFA’s primary target in its proposed ban was actually a different type of private transfer fee — one designed to put money into the pockets of developers and bond investors without benefiting residents. But FHFA’s proposed rule instead took a wholesale swipe at the entire spectrum of transfer fees, including the ones levied by HOAs.

In its proposal, the FHFA criticized homeowner association fees for often being "unrelated to the value rendered" to residents, and unfair to unit owners who are forced to pay them "even if the property’s value has significantly declined" since the house was first purchased.

Stung by 4,200 mainly critical comment letters from the boards of directors and management of condominiums and large master-planned communities like Hilton Head in South Carolina and Rancho Sahuarita near Tucson, Ariz., the FHFA revised its proposal last year, and on Feb. 15 came out with its final rule.

The good news for millions of unit owners, sellers and the real estate professionals who assist them: HOA transfer fees are still OK. Fannie and Freddie will still buy loans on units with covenanted fees. However, builders, developers and investment firms hoping to make millions off bonds backed by securitized private transfer fees are out of the ballgame.

Here’s the story in a nutshell.

Several years ago a firm called Freehold Capital Partners, initially based in Texas and later in New York, promoted what it called "capital recovery fees" to developers as a way to help finance their master planned communities and condos.

The idea worked like this: For a priod of 99 years, every lot in a participating new development would be sold subject to a covenanted private transfer fee requiring each successive reseller of the property to pay a fee equal to 1 percent of the sale price to a trustee.

The trustee would, in turn, forward portions of the money to the original developer, Freehold Capital, and the investors in bonds Freehold planned to sell based on securitizations of the projected cash flows produced by decades of sales. Developers who wanted cash immediately could sell their rights upfront.

Freehold never revealed the identities of developers who participated in its program, but did claim that it had signed up "thousands" of projects worth "hundreds of millions of dollars" around the country.

One of the firm’s surprise defenders when its program came under attack was Henry Cisneros, former U.S. Housing and Urban Development secretary and chairman of a development firm called City View.

That firm sent a letter signed by Cisneros to FHFA urging regulators to allow use of private transfer fees that "have the potential to help fund infrastructure, reduce negative equity, make homeownership more affordable, and create jobs, while also funding important societal goals such as affordable housing."

Cisneros later backed off, saying the letter was a "mistake" and was sent to the agency in error by an office aide.

Critics of the transfer-fee concept — ranging from the National Association of Realtors and the American Land Title Association to labor unions and consumer advocacy groups — said imposing such fees in perpetuity would rip off successions of buyers while not benefiting the community, and would siphon off billions of dollars of homeowner equity over decades and send it to Wall Street bond buyers.

Their two-year campaign against private-benefit fees was waged at the state legislative level as well as at the federal level, and ultimately led to state bans or restrictions in 38 states.

Based on the final rule just released by the FHFA, the feds got the point. The regulation prohibits Fannie and Freddie from financing mortgages with private transfer fees except where the fees "provide a direct benefit to the real property" itself.

In other words, the fees are acceptable if they fund community improvements and maintenance as in HOA fees. The rule covers all transfer fees put into covenants on or after Feb. 8, 2011, as well as bonds backed by revenue streams after that date.

Note, however, that private-benefit fees mandated by deeds created before Feb. 8, 2011, are not affected by the rule.

So any owner in a community or condominium project containing covenants that predate the new rule need to be on guard: If you decide to sell your unit, you are likely to be ineligible for conventional financing through Fannie or Freddie. Worse yet, the Federal Housing Administration has a similar ban, so you just may have a severe challenge finding purchasers unless they’re prepared to pay in cash.

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