Hawaii Gov. Linda Lingle has joined lawmakers and governors in 13 other states across the country who are taking action to protect American homeowners from losing equity in their homes.
[IMAGE]Lingle has signed a new state law that places a ban on Wall Street Home Resale Fees, also known as ""private transfer fee covenants."" These fees are sometimes worked into the language of home purchase contracts and require 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.
Critics say the practice steals home equity, lowers home resale values, and adds another layer of difficulty to selling a home by requiring homeowners to pay a large fee in order to proceed with the transaction.
""Lawmakers are using their common sense to stand up for American homeowners and send a message that dangerous
[COLUMN_BREAK]financial schemes won't be tolerated,"" said Kurt Pfotenhauer, CEO of the ""American Land Title Association"":http://www.alta.org, which is leading the push to put a stop to private transfer fee covenants. ""Once legislators learn about Wall Street Home Resale Fees, it becomes an easy decision to outlaw them,"" Pfotenhauer said.
Hawaii joins Arizona, Florida, Kansas, Iowa, Maryland, Minnesota, Mississippi, Missouri, Ohio, Oregon, Texas, and Utah in banning Wall Street Home Resale Fees. California requires notification that these fees exist in a contract.
Efforts to fight this practice are continuing to gain momentum. Two additional states, Illinois and Louisiana, have bills awaiting a governors' signature. Other states with bills pending include Alabama, Georgia, New Jersey, North Carolina, Rhode Island, and South Carolina. Seven other states are expected to introduce similar legislation in 2011.
The federal government's landmark financial reform legislation doesn't address Wall Street Home Resale Fees, but Rep. Brad Sherman (D-California) put the practice at the forefront of lawmakers' minds at a congressional hearing as recently as May, calling it a ""new predatory financial scheme.
The ""Federal Housing Finance Agency"":http://www.fhfa.gov (FHFA) has indicated that Fannie Mae and Freddie Mac are considering excluding mortgages with transfer fees from their purchase pools. The ""Federal Housing Administration"":http://www.fha.gov (FHA) has already said it will not insure home loans that incorporate Wall Street Home Resale Fees.