Note: CRE Appreciates Comments To Date: For Your Easy Reference the Details of the Draft CRE Proposal Are Provided Herein

CRE Proposed Recommendations TF 3

Transfer Fees for Developers vs HOA’s

It appears that this draft proposal misses the boat, based on comments from a number of your respondents, including myself. Transfer fees which continue into the coffers of the developers probably should be prohibited, as they are merely another way to make a profit long after the sale of property has been made. However, transfer fees paid into the HOA to provide funding for capital projects and major repairs are necessary and should not be restricted by either the Federal Government or any State Government. There are too many variables in this area to be controlled by a central autoority. If the buyer does not want to contribute for capital funding, the buyer does not have to purchase in that project. But do not tie the hands of the HOA trying to maintain the value of the buyers’ investments. It would appear that this proposal has not been well thought out to include the ramifications (which many have called to your attention), and the housing agency should go back to the drawing board to recondiser such a proposal on the long range value of the property to which the mortgage covers. Not a good idea in my book.
Bob Differding, Chair, District 7,
Leisure World Community Assoc.
Mesa, AZ 85206-3013

Transfer fees enable new owners to buy into the upkeep, maintenance and re-furbishing of HOA common properties. These fees are disclosed prior to any sale, and anyone who does not want tp pay such fees has the option to buy somewhere else. So if people buy, they agree to pay the fee, and become an invested owner of their new community. This community has not had any complaints in over 35 years, so why does the government feel they need to intervene at this point? Experience tells us that 1% of the population doesn’t agree with the rest of society, and if they complain, do we change everything for 1%?
Please just leave the other 99% alone, and things will work out just fine, without government intervention.

CBIA response to draft recommendations

The California Building Industry Association (CBIA) has reviewed the proposed recommendations by the Center for Regulatory Effectiveness (CRE) on FHFA’s proposed guidance for transfer fees. CBIA is encouraged by CRE’s recommendations on the regulation and disclosure of transfer fees. We would like to reiterate our view on what action the FHFA should take. The FHFA should not ban the GSE’s on Federal Home Loan Banks from investing in mortgages encumbered with a transfer fee but should instead adopt a clear and concise disclosure standard so the buyers are aware the fee exists and what the benefit is. If FHFA is to regulate the use of transfer fees in any way, it must and should prepare an environmental impact statement to address the impacts of all uses of transfer fees. Again, the application for the use of these fees needs to be broader than HOA’s or government purposes and these fees have a wide application and benefit to environmental and affordable housing purposes.

President LindenTowers Co-op#4, Inc.

The Board of Directors of Linden Towers Co-op #4, Inc. representing 181 shareholdeers residing in the cooperative housing complex request an exemption from the FHFA proposed ban of transfer fees (flip Tax) on the sale of a unit.

Cooperative housing is unique to New York, and is a means of providing affordable housing for middle class families and senior residence on fixed incomes. The FHFA proposal would impede our ability to repair, maintain, and upgrade our property without imposing extra ordinary increases and assessments on our shareholders. The funds we realize from the transfer fees go directly into the Corporation’s reserve accounts allowing us to finance projects without adding this extra burden on the families and seniors.


Transfer fees are the only source of revenue enabling co-ops to maintain their buildings without having to increase carrying charges by extra ordinary amounts. We have provided the most affordable housing for seniors and families in New York City.

If we are not exempt from a ban on the transfer fees, many shareholders will be forced to move, at great loss. The stability of the middle class in our city will vanish.

Please do not impose this covenant on our citizens and alter their quality of life. Save Linden Towers Co-op from this travesty.

Freehold has it Right

I thoroughly read the suggested recommendation, associated notes and the responses from Freehold. I must say that I agree thoroughly with Freehold’s analysis. I do not believe that any guidance or regulation is needed beyond rules for complete transparency.

Member, Board of Directors, 91 Payson Owners Corp.; former Treasurer

I am a present Board member and former Treasurer of 91 Payson Owners Corp., a New York City building that has been a cooperative since 1983. I am writing to object to the proposed private Transfer Fee Guidance being applied to coops.
The transfer fees that our building receives from sales do not result in revenue for any private investors or developers. The fees, which are reasonable and fully disclosed, are applied to our reserve fund and are used for Capital Improvements.
The transfer fees have been no impediment to sales of apartments in our building, while to eliminate them would cause hardship to shareholders. Maintenance fees would have to be raised significantly, impacting on the financial health of our cooperative and impeding sales. Also, assessments may have to be levied, which would cause unanticipated financial burden to shareholders, many of whom are on fixed incomes.
Eliminating transfer fees would require a 2/3 vote to amend our documents, which is very difficult to do. If we could not pass the changes, the unintended effect would be that it would be difficult for prospective buyers to get a mortgage, thus impeding sales.
For these reasons, we believe that the reasons for the recommendation are not valid in the case of coops, so please exempt coops from any measure that is passed.”

Changing covenants a hassel

I object to yet another hurdle being added to getting or refinancing a mortgage for condo buyers or owners. A number of our owners are retirees who own their units mortgage free. Other struggling owners are blocked from selling their units by lenders. Unfortunately, prospective buyers are blocked from getting loans by banks citing numerous “federal regulations” on condo lending. We do not need yet another restriction. Three of our 32 owners have been forced into bankruptcy–all single women struggling to find jobs. Their delinquency is placing a burden on all owners.

working families and retirees who simply cannot afford an increase in their housing expenses during these tough economic times.

If adopted, FHFA’s proposal would, in effect, eliminate all flip taxes, including those that fund co-ops, condominiums and HOAs, which are used to maintain the owners’ properties. Unlike other private-transfer fees that go straight into the pockets of for-profit, third-party developers, flip taxes paid to co-ops, condominiums and HOAs before or after a property sale directly benefit you and your neighbor-owners by funding the cash reserves, the maintenance, or the capital improvements of your properties. In this Congressional district, numerous co-ops, condominiums and HOAs effectively use flip taxes to keep monthly fees down. FHFA’s proposed blanket prohibition, in an otherwise useful reform of private-transfer fee covenants, would force dramatic increases in co-op and condominium monthly-carrying charges to make up for lost revenue, making it difficult for co-op, condominium and HOA residents in my district and across New York City to remain in their homes or sell them. Many of these owners, as I’m sure you know, are working families and retirees who simply cannot afford an increase in their housing expenses during these tough economic times.