For Immediate Release: Contact: Rachel Wolf, (202) 331-2120 September 30, 2010
“Dear Colleague Letter Explains “Fees Provide No Benefit to Consumers”
WASHINGTON – The Coalition to Stop Wall Street Home Resale Fees applauds Congresswoman Maxine Waters and Co-Sponsors Sherman, Sires, and Gwen Moore for introducing the Homeowner Equity Protection Act of 2010 to ban private transfer fees and protect consumers from a new predatory scheme that forces homeowners to pay for the right to sell their own properties.
“We applaud Congresswoman Waters and the bill’s co-sponsors for introducing a powerful bill today that will protect consumers from predatory transfer fees that depress home prices and steal equity from homeowners,” said Kurt Pfotenhauer, CEO of the American Land Title Association. “This bill is an important step in enhancing consumer protections against these for-profit fees and safeguarding our already fragile real estate market from further abuse.”
Manhattan-based Freehold Capitol Partners is leading the push to add these fees to home purchase contracts. The fees require that a percentage of the final sale price of a home be paid to a private third party every time the property is sold, typically for 99 years. Freehold is attempting to then sell the right to collect these fees on Wall Street—all the while padding investors’ pockets while stealing equity from homeowners.
While traditional covenants have an accepted and beneficial role in the housing market by benefitting the land, Wall Street Home Resale Fees are predatory legal instruments that threaten American homeowners by forcing them to pay a premium for the right to sell their own property.
The Homeowner Equity Protection Act of 2010 and the Coalition recognize the long-standing principle in real estate law that any covenant that burdens the land should also benefit the land. Unlike fees charged by homeowners’ associations that are used to improve the community, these for-profit transfer fees provide no service or benefit to homeowners and only raise the costs of home ownership.
“The Home Equity Protection Act of 2010 is a strong step forward that would help consumers across the country, preventing unwarranted and spurious increases in the costs of homeownership,” said Evan Fuguet, Senior Policy Counsel at the Center for Responsible Lending. “Unlike conveyances that support the community, affordable housing or the environment, these private transfer fees have no added benefit for homeowners and home buyers, and are reminiscent of the irresponsible fee-packing behavior we witnessed during the heyday of abusive subprime home lending .”
This bill is the latest in a series of government actions to limit Wall Street Home Resale Fees. To date, 18 state legislatures in Arizona, California, Delaware, Florida, Hawaii, Illinois, Iowa, Kansas, Louisiana, Maryland, Minnesota, Mississippi, Missouri, North Carolina, Ohio, Oregon, Texas and Utah have recognized the dangers of Wall Street Home Resale Fees and have restricted their use. On the federal level, the Federal Housing Finance Agency has issued a guidance that would prevent Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from investing in mortgages with these fees.
“These fees add no benefit or value to a property, and are little more than a predatory scheme meant to take advantage of unsuspecting homeowners,” said Pfotenhauer. “Our Coalition thanks Congresswoman Waters and the bill’s co-sponsors for recognizing the danger that these fees pose to homeowners and the real estate market.”
The Coalition to Stop Wall Street Home Resale Fees has organized to fight the dangerous financial scheme of transfer fee covenants and to protect homeowners across the country. Together, we are fighting to ensure that homeowners keep full equity in their home, and have the freedom to buy or sell their home without paying-off a private third party.