ALTA Asks FHFA to Clarify Proposed Rule Banning Private Transfer Fees

April 12, 2011

The American Land Title Association submitted a comment letter thanking the Federal Housing Finance Agency (FHTA) for its proposed rule banning the GSEs from purchasing mortgages backed by collateral that is encumbered with a private transfer fee covenant.

“ALTA strongly supports FHFA’s efforts to protect consumers by eliminating these predatory fees while protecting legitimate fees that benefit homeowners associations and appropriate nonprofits,” wrote ALTA President Anne Anastasi.

ALTA also posed a few implementation questions to the agency, including:

  • How will the Enterprises discover whether property is encumbered by a transfer fee?
  • What processes will the Enterprises use to determine whether a transfer fee is exempt from this rule?
  • Are the Enterprises Permitted Purchase Mortgages on Properties Encumbered by Private Transfer Fee Covenants in a State Where the Law is Unclear About Whether a Private Transfer Fee is Legal?
The ALTA is hopeful the FHFA will finalize the rule by the end of summer.

More than 120 ALTA members responded to a grassroots alert, sending emails to the FHFA in support of the proposed rule.