Wednesday, September 1, 2010

Proposed Federal Regulation may further restrict access to mortgages for those living in associations

Many of you may have already heard or read about a proposed regulation from the Federal Housing Finance Agency (FHFA) issued on August 13, 2010, which would prohibit Fannie Mae, Freddie Mac and all federal home loan banks from purchasing mortgages for properties in communities with “deed-based transfer fees”.

The definition of these private deed-based transfer fees appears broad enough to include the types of screening and transfer fees that many communities in Florida charge when property in those communities is conveyed. If this proposed rule is adopted as it is currently drafted, that could mean that residents living in associations with such fees may be locked out of the mortgage markets.

There is a very real possibility that the rule will be modified after the FHFA is informed about this regulation’s potentially disastrous effect on thousands of Florida communities. Towards this end, the Community Associations Institute (CAI) is conducting a survey relating to the use of these fees by community associations. After the data is collected (no later than September 16, 2010), CAI will prepare a response to FHFA regarding its proposed regulation.

Whether you agree that associations need to charge a fee to properly screen new purchasers or you hate the idea, if this new regulation is adopted it will impact you either way as it can restrict access to financing for those living in associations with these fees.

I am sure there will be the usual useful comments to dismantle the association, not buy in one in the first place or amend the documents to remove any transfer fees, but the easiest path to take for those currently living in an association with these fees is to encourage the FHFA to modify its proposed regulation so the millions of Floridians living in community associations can have equal access to mortgages for their properties.

There will also be an opportunity for individual communities to file comments on the proposed regulation and naturally, you can and should reach out to your representatives in Congress on this issue.

If you are interested in taking the CAI Survey on these fees, please click here. If you have any questions, please send them to G&PA@caionline.org with the subject line “FHFA Transfer Fee Regulation.”

No comments:

Post a Comment