Ohio Gov. Ted Strickland took swift action Monday to protect Ohio homeowners by signing House Bill 292. The new law places a ban on Wall Street Home Resale Fees (also known as “private transfer fee covenants”), a dangerous new financial scheme that steals home equity, lowers home resale values and adds another layer of difficulty to selling a home.
Said Kurt Pfotenhauer, CEO of the American Land Title Association (ALTA), “Governor Strickland stood up for Ohio homeowners by outlawing Wall Street Home Resale Fees. There was a broad coalition of organizations – including the Ohio Land Title Association, Ohio State Bar Association, Ohio Association of Realtors, and Ohio Bankers League – who saw the danger this hidden financial burden places on homebuyers. ALTA is stressing the importance of organizations taking quick action to protect homebuyers.”
Wall Street Home Resale Fees is a controversial new financial scheme that is facing opposition across the country. Developers, in consultation with Wall Street advisers, are attempting to add language to home purchase contracts requiring that a percentage of the sales price be paid to the original corporate owner of a property every time the property is sold, typically for 99 years. The right to collect these Wall Street Home Resale Fees would then be securitized and sold to enrich investors at the cost of stealing equity from consumers, forcing homeowners to pay a large fee to sell their homes and adding a complicated legal roadblock to the home sale process.
“Representatives Tom Letson and Scott Oeslanger, and Senator Bill Seitz, had the foresight to lead this important prohibition through the legislature,” said Pfotenhauer. “In a still volatile and challenging housing market, these legislators have truly protected homebuyers from having the home equity they think they have from being taken by faceless Wall Street financiers.”
Dow Jones Newswire recently reported on the growing resistance to Wall Street Home Resale Fees. In an article titled “New York Firm’s Property Transfer Fee Plan Stirs Controversy”, Jessica Holzer reports, “Rep. Brad Sherman called it a "new predatory financial scheme" at a congressional hearing last month. Federal Housing Finance Agency Acting Director Ed DeMarco hinted at the hearing that his agency might bar Fannie Mae and Freddie Mac from buying mortgages on homes with transfer fees attached.” DeMarco said he was "very troubled" by what he was learning about transfer fees: "I would expect that the enterprises and FHFA would have something to say about this is in the near future." The Federal Housing Administration earlier this year already said it won’t insure mortgages with Wall Street Home Resale Fees.
State governments across the country have also recognized the danger of Wall Street Home Resale Fees and have begun to take action. With the passage of HB 292, Ohio becomes the 12th state to have restricted the use of Wall Street Home Resale Fees.