New Jersey Becomes 19th State to Restrict Private Transfer Fees
|December 14, 2010|
New Jersey Gov. Chris Christie (R-NJ) recently signed legislation to protect New Jersey homeowners by signing A. 2861 to restrict private transfer fees. The new law places a ban on these fees, a dangerous new financial scheme that steals home equity, lowers home resale values and adds another layer of difficulty to selling a home.
“The governor stood up for New Jersey homeowners by protecting consumers from these predatory fees,” said Dan Mays, president of the New Jersey 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.
New Jersey becomes the 19th state to have restricted the use of Wall Street Resale Fees. New Jersey joins Arizona, California, Delaware, Florida, Hawaii, Illinois, Iowa, Kansas, Louisiana, Maryland, Minnesota, Mississippi, Missouri, North Carolina, Ohio, Oregon, Texas and Utah in restricting the dangerous. On the federal level, the Federal Housing Finance Agency has issued a guidance that would prevent government-sponsored entities from investing in mortgages with these fees and Congresswoman Waters (D-CA) and colleagues have introduced the Homeowner Equity Protection Act of 2010 to ban the fees across the country.
The American Land Title Association (ALTA) has been advocating for the ban of these fees for the past year. The association strongly supports proposed guidance from the Federal Housing Finance Agency (FHFA) to prevent government-sponsored enterprises Fannie Mae, Freddie Mac and the Federal Home Loan Bank from investing in mortgages encumbered by private transfer fee covenants.
"As an association representing companies that provide homeownership assurance, we believe private transfer fees hinder the safe and secure transfer of property,” said Kurt Pfotenhauer, chief executive officer of ALTA. "These covenants are like a broken ATM machine, giving investors access to homeowners’ hard-earned money.”