August 24, 2010 – From CNN Money — In some newly constructed housing developments home builders are including a clause in the contract demanding a 1 percent transfer fee to be paid to them every time the property is sold over the next 99 years.
The fee isn’t for improvements or maintenance. It is just a payment to the builder.
“It’s of no benefit to consumers,” says Kathleen Day of the Center for Responsible Lending. “It’s another innovative way to price gouge. Every extra dollar they suck out of people’s wallets takes away from other spending. It’s not good for the economy.”
Freehold Capital Partners, which has developed the program, says it has enlisted thousands of developers nationwide. It argues that this is good for the economy because it will provide builders with more capital.
Meanwhile U.S. Rep Brad Sherman, a California Democrat, is pushing for approval of legislation to make these fees illegal. Also, in the past month, the Federal Housing Finance Agency has proposed rules preventing Fannie Mae and Freddie Mac from buying mortgages that include home resale fees.
Source: CNNMoney.com, Les Christie (08/23/2010)