This is serious!

Recently the Federal Housing Finance Agency proposed a rule prohibiting Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from buying loans in buildings where there are flip taxes (transfer fees imposed by and paid to the co-op corporation or condo association at closing.) I have heard two very different reasons for why they are doing this: first, that some developers across the country are using these flip taxes as a way to enrich themselves, and second, that the anticipation of flip tax revenues makes the governing Boards of co-ops and condos less likely to budget appropriate contingency funds for unexpected problems.  While these reasons are not without merit, this rule proposed by the FHFA is nothing short of disastrous for our business and for consumers all over New York City.

Pretty much all loans made by the big banks which conform to Fannie and Freddie guidelines (in NYC, which has special guidelines because our real estate is so expensive, that means loans of up to $727,500) are sold into the secondary market. This rule, the moment it passes, will obliterate that secondary market. With no secondary market to sell to, the big banks (which make 75% to 80% of the loans in our market) will just stop making these loans. And presto! The loan market for everything under $730,000 will dry up. The local and savings banks which keep their loans rather than selling them can’t possibly keep up with the demand. So going forward, consumers just won’t be able to get loans for $730,000 or less in buildings with flip taxes. And let’s face it-just about EVERY co-op and condo building in New York City has a flip tax.

So whether you are a real estate agent doing business anywhere apartments are sold, or a consumer who might want to buy or sell one, this FHFA rule will have a big negative impact on you. Please write your representatives in government TODAY about this dangerous buckshot approach proposal (the comment period ends October 15th!). If you live in New York you can go to the Real Estate Board action site at http://www.RebnyActionCenter.com This site makes it extremely easy to contact all your elected representatives with just a few clicks. But please-DO IT! This is serious!