The Federal Housing Finance Agency is proposing new guidance to ban the government-sponsored enterprises from purchasing mortgages with private transfer fee covenants tied to them.

If successful, FHFA would restrict Fannie Mae and Freddie Mac from investing in mortgages or securities with private transfer fees. This policy would also apply to the Federal Home Loan banks and mortgages their members pledge as collateral for advances.

Private transfer fees have to be paid every time a property is sold over a 99-year period. Critics claim promoters of these fees get homeowners and developers to "hide" these transfer fees in covenants or homeowners association documents with buyers not discovering them until they go to the closing table.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.