TRANSFER FEES AND FLIP TAXES
Recently the Federal Housing Finance Agency (FHFA) issued a position known as the "Guidance on Private Transfer Fee Covenants" which proposes that Fannie Mae and Freddie Mac not purchase or invest in mortgages that are encumbered by private transfer fees or flip taxes.
The intent of the restriction is to prevent developers from imposing 99 year covenants on new homes requiring sellers to kick back a percentage of the sale price of the home to the original developer upon resale. This practice is not prevalent in New York, but has gained popularity elsewhere in the United States, mainly the Southwest.
The FHFA "guidance" however, does not distinguish between the developer practice and the standard Cooperative/Condominium flip tax implementation more common in New York City and so has been met with great opposition from many Real Estate organizations.
REBNY, among other groups, has worked to have the ordinance clarified and encouraged Cooperative and Condominium Boards that may be affected to contact their local United States Senators and members of Congress in an effort to gain support for exclusion from the regulation.
The above has resulted in a good outcome. The Federal Housing Finance Administrator (the FHFA) will be exempting from their transfer fee prohibition any cooperative, condominium or homeowners association. In other words, co-ops, condos and HOAs will still qualify under Fannie Mae and Freddie Mac's Guidelines even if they have Transfer Fees or Flip Taxes.
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