Federal Housing Finance Agency Proposes Rule on Private Transfer Fees
The Federal Housing Finance Agency ("FHFA") recently issued a proposed rule on private transfer fees that, if finalized, would prevent the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal Home Loan Banks from "dealing in mortgages on properties that are encumbered by private transfer fee covenants" ("Proposed Rule"). Private transfer fee covenants typically require that a developer be paid a transfer fee each time a property is resold. The Proposed Rule creates an exception for private transfer fees paid to homeowners' associations, and other similar associations that are "used exclusively for the direct benefit of the real property encumbered by the private transfer fee covenant."
In its current form, the Proposed Rule will apply to private transfer covenants created on or after the rule is published in the Federal Register. Regulated entities will have 120 days to comply. The FHFA invites comments on the Proposed Rule, and any of the following means can be used to submit those comments:
We will continue to monitor developments on this topic and will provide updates as needed.
If you have any questions regarding this article or its possible impact on your activities and operations, please contact your Sherman & Howard attorney or one of the attorneys in our Real Estate Group.
Sherman & Howard has prepared this advisory to provide general information on recent legal developments that may be of interest. This advisory does not provide legal advice for any specific situation. This does not create an attorney-client relationship between any reader and the Firm. If you want legal advice on a specific situation, you must speak with one of our lawyers and reach an express agreement for legal representation.© 2011 Sherman & Howard L.L.C. February 15, 2011