The Federal Housing Finance Authority (“FHFA“) is proposing new guidance on transfer fee covenants for Fannie Mae, Freddie Mac and the Federal Home Loan Banks, restricting such entities from dealing in mortgages on properties encumbered by such covenants. Typically, transfer fee covenants direct a specified percentage of the sale price on real estate encumbered by the covenant to an individual or entity, every time the property sells. These covenants have recently become popular in a number of states as developers seek new sources of funding in the current economy – so popular in fact, that U.S. Congresswoman Maxine Waters and other are sponsoring legislation to ban these “Wall Street Resale Fees.” The proposed FHFA guidance states that the covenants
[A]ppear adverse to liquidity, affordability and stability in the housing finance market and to financially safe and sound investments.
Interested parties may submit comments on the proposed guidance directly to FHFA on or before October 15, 2010, via e-mail at email@example.com Include “Private Transfer Fee Covenants, (No. 2010-N-11)” in the subject line.