Minneapolis, Minn. (May 20, 2010) – Minnesota Governor Tim Pawlenty took swift action Wednesday to protect Minnesota homeowners by signing the Transfer Fee Covenant Act. The new law places a ban on private transfer fee covenants (also known as “Wall Street Resale Fees”), a dangerous new financial scheme that steals home equity, lowers home resale values and adds another layer of difficulty to selling a home.
The Minnesota Land Title Association had urged Governor Pawlenty to sign the legislation, and is thrilled that the Governor has taken action. Said David Welshons, President of the Minnesota Land Title Association, “Today the Governor stood up for Minnesota homeowners, and showed greedy Wall Street investors that their dangerous financial schemes won’t be permitted in our state.”
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 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.
Minnesota becomes the 11th state to have restricted the use of Wall Street Resale Fees. The Minnesota Land Title Association is proud to stand with Governor Pawlenty, and thanks him for taking action to protect homeowners across the state.
Transfer Fee Law Stands Up For Title Companies at the Expense of Consumers.
It is easy to understand why the title industry opposes these fees (if they miss the fee they could be liable). What is more difficult to understand is why any legislator in their right mind would actually listen to them. They clearly have not read The Fleecing of America. This is the STATE BAR not some blogger with an agenda.
http://www.iowabar.org/MiscDoc.nsf/2b85a4ea12f4bfac8625669d006e27ab/3260df54
a8f7f5fa86256cb80070ee4f/$FILE/Title%20insurance%202.pdf Or look at the Congressional report at http://www.consumerfed.org/pdfs/title_insurance_testimony042606.pdf
Capital Recovery Fees allow homeowners in large master planned developments to pay for infrastructure over time, instead of paying 100% of the costs up front. For consumers who prefer to pay 100% of the burden for streets, utilities, etc., up front, and to pay a higher commission, and finance the costs, and then pass the costs along, numerous choices exist. However, for those who wish to live in a community where the fees are apportioned over time, a Capital Recovery Fee is an excellent alternative – but not in Minnesota, where politicians have decided that protecting title companies, at the expense of consumers, is a good idea.
It is true that developers want to sell off the future income stream to pay for development costs today, and to pay down the loans incurred in installing the development costs. Right now funding is not available on commercially reasonable terms, and if developers can more fairly apportion costs, and repay the “bonds” with the future assessments, and provide consumers with a lower price today, then where is the harm?
I guess the harm is that a title company might not actually do the job for which it are charges an exorbitant premium. Thank goodness the legislature, and those like Senator Linda Scheid (DFL-Brooklyn Park) have stepped in, taken away consumer choice, and protected the title companies. If Minnesota banks fail, and Minnesota development projects fail, it seems like a small price to pay to insure that title company claims stay under 5 cents for every premium dollar paid by a homeowner.