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Update on Charitable Transfer Fees and Call to Action

April 7, 2011

In response to the comments, the Federal Housing and Finance Agency (FHFA), on Feb. 2, 2011 issued the Proposed Rule that partially addresses some of the concerns that were raised.  However, the Proposed Rule creates additional problems and uncertainty that we believe will continue to cause problems and issues.  This includes restricting communities from using transfer fees to support environmental, affordable housing, and other nonprofit programs that enhance our communities.

The Coalition to Save Community Benefits was formed to oppose this effort and has been working with groups like yours to ensure that the FHFA understands the consequences of this Proposed Rule.  Your comments about this Rule are so important to the process.

We urge you to submit additional comments to the FHFA.  THE COMMENT PERIOD CLOSES ON APRIL 11, 2011. You can submit comments through our website at for your convenience.

This article is an update to the original post dated October 20, 2010:

Fannie and Freddie Propose Ban on Charitable Transfer Fees

October 20, 2010 | Washington, D.C.

Thousands of organizations have protested the proposed elimination by the Federal Housing and Finance Agency (“FHFA”) of lending on any property that has a private transfer fee covenant. Many land trusts use such funds for stewardship, restoration and acquisition.  

Working with the Realtors Association, FHFA, the parent agency of Fannie Mae and Freddie Mac, as well as the Federal Home Loan Banks, has issued a proposed guidance document for public comment that would effectively eliminate the use of all Private Transfer Fees (“PTFs”).  If allowed to become effective, the rule removes a critical funding mechanism for conservation, affordable housing, and community infrastructure.  

Congresswoman Maxine Waters and Co-Sponsors Sherman, Sires, and Gwen Moore introduced the Homeowner Equity Protection Act of 2010 to ban all private transfer fees. It is being portrayed as consumer protection from predatory scheme that forces homeowners to pay for the right to sell their own properties. It does not address charitable transfer fees, but the coalition is working with Waters to insert such language.

Many land trusts use transfer fees to fund, and often times fully fund, conservation easement stewardship. Land trusts are now more aware than ever that the actual costs of stewardship and legal defense are significant. Granting landowners are limited in their ability to pay to fully fund all stewardship and legal defense expenses for a conservation easement of fee donation. More land trusts are exploring transfer fees as an additional tool to help close this funding gap.  

Many land trusts have been using a transfer fee for years, and therefore risk losing a potential long term source of stewardship and other funding. These fees properly used fund community programs and unique community benefits.

Realtors in several states have also been pursuing legislation to prohibit transfer fees at the state level. Such legislation has been successfully defeated (SC) or modified (NC, IL and CA). Other states have blanket prohibitions (TX, MO, FL and OR). Check your state law on this issue so you are not surprised in your state.

A coalition of concerned charitable organizations, government agencies and others is working on the issue. The Coalition is also working to insert exemptions for

  • any 501(c)(3) or 501(c)(4) organization
  • all transfer fees prior to January 1, 2011

View more information and a list of coalition members.The Alliance is working on this issue by informing its members, joining the coalition and calling supporters.

Developers and investors are securitizing transfer fees to generate long-term income streams for their private benefit. An example of this is Freehold Capital Partners of New York. This use of securitized PFTs angered home buyers and realtors.

The FHFA needs to hear from you. Request that the FHFA:

  1. Insert an exception for tax-exempt organizations’ use of transfer fees;
  2. Continue to support homes and homeowners with community-benefits fees;
  3. Support reasonable Community-Benefits Fee Standards that distinguish between community-benefits fees (charitable purpose) and abusive fees that benefit only developers;
  4. Allow communities to freely associate to support community services, schools, affordable housing, and conservation with no new taxes; and
  5. At a minimum, extend the comment period through January 30, 2011, to allow for fully informed decision-making that fully considers the implications of the proposed harsh change.

Submit comments as follows:

Via E-mail:
Reference: “Guidance on Private Transfer Fee Covenants, (No. 2010-N-11)” – include this in the subject line.

Via Mail/Hand Delivery:
Address: Alfred M. Pollard
General Counsel, Federal Housing Finance Agency
Fourth Floor
1700 G Street, NW
Washington, DC 20552
Reference: “Guidance on Private Transfer Fee Covenants, (No. 2010-N-11)” – include this in the subject line.

Via Federal eRulemaking Portal:
Federal eRulemaking Portal:

Ask your Members of Congress to write to FHFA to request both a comment extension and a charitable exemption.

Connect with your local affordable housing groups and government housing agencies. Ask them to write a letter to FHFA too.

Tell your land trust colleagues about this and share the talking points so everyone can take informed action.

Join the coalition. Click on the hotlink to submit your organization’s logo.  Then click on the ‘send a message’ link to send an email directly to FHFA. It is fast and easy.


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