Sellers and would-be buyers of FSBO properties, or for sale by owner real estate, are watching closely the developments surrounding the debate of whether transfer fees should be banned or not. Recently, the U.S. Federal Housing Finance Agency (FHFA) has changed its stand on a proposed ban on these fees.
The FHFA proposed banning the transfer or covenanted fees last year. Locally, this would have meant that properties, including repo homes in Columbus, condominiums in other areas of the state and other properties that are up for resale, will not be charged with fees that range between 0.25% and 0.75% of the property's resale price. The fees are collected by homeowner associations whenever a property is resold.
The transfer fees from resold regular houses and repossessed homes in Ohio are used by associations to finance infrastructure projects, community projects and even for establishing mandated capital reserves. The earlier proposal by the government agency would have banned the fees from loans that are qualified for purchase by government-controlled entities, such as Freddie Mac, Fannie Mae, and Federal Home Loan Banks.
FSBO properties may also be affected by the issue, especially as the earlier proposal also suggested a ban on mortgages that contain private transfer charges under which revenue is channeled to investors and not to community projects. Homeowner associations all around the state and the country heaved a sigh of relief when the government agency retracted the proposal.
According to them, if the measure had been approved, associations would have lost tens of millions of dollars in revenue and would have likely discouraged homebuyers from making a purchase, even those who are buying repossessed properties for sale and other cheaper properties. Associations also stated that the proposal would have contributed to a further decline in values of properties since a big percentage of homes will not qualify for conventional loans.
Majority of sellers and buyers of FSBO properties will probably not be affected directly by the proposal, but they still kept tabs on which way the debate will go. The revision of the proposal, under which fees will only be banned at investor-oriented initiatives, has been met by positive reactions by most home sellers.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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