According to the Wall Street Journal, the Federal Housing Finance Agency (FHFA) announced this week that it will prohibit government-controlled mortgage-finance companies, including Fannie Mae and Freddie Mac, from purchasing mortgages that require the payment of Private Transfer Fees.
Private Transfer Fees are a controversial method some developers are using to fund development costs. Under this method, the developer inserts a condition in the deeds for all of the properties in a development requiring that a transfer fee be paid each time the properties within the development are sold. The developer uses the future revenue stream to finance the cost of the development.
According to the report, the rule will apply to fee covenants created after February 8, 2011. Exempted from the rule are fees paid to homeowners and condominium associations and some tax-exempt organizations.
The South Carolina General Assembly enacted legislation in February to prohibit Private Transfer Fees in South Carolina. Read the legislation at scstatehouse.gov by clicking here.