UPDATE: Outrage Over the Most Outrageous Fee Ever

Photo (cc) by woodleywonderworks

Back in June, we were one of the first media outlets to report on the innocent-sounding “capital recovery fee” being marketed by a company called Freehold Capital Partners. Our story described it like this…

A 1 percent “transfer fee” split between Freehold and the developer of your house every time it’s sold for the next 99 years. So if you sell your house for $300,000, you’ll owe $3,000. And if 20 years later it’s sold for $600,000, that seller will owe $6,000.

Also called a “private recovery fee,” the most insidious part of the scheme is that homeowners aren’t always aware of what’s happening – this fee can get buried in the reams of paper that get signed at closing.

Well, since mid-June when the news first broke, the reporting – and the outrage – has spread to The Washington Post, CNN, and many other major media outlets. The result? These states have banned the insane practice of charging you to sell your house for nearly a century:

  • Arizona
  • Florida
  • Kansas
  • Iowa
  • Louisiana
  • Maryland
  • Minnesota
  • Missouri
  • Ohio
  • Oregon
  • Texas
  • Utah

Less than a month after our original story, several real estate-based organizations – including the National Association of Realtors and the American Land Title Association – formed The Coalition to Stop Wall Street Home Resale Fees. The coalition is now lobbying the federal government to enact a nationwide ban on these fees. And people are starting to listen – recently the Federal Housing Finance Agency (FHFA) proposed restricting government-sponsored enterprises from investing in mortgages with private transfer fees. If that proposal goes through, the fee will be essentially dead, since government-sponsored Fannie Mae and Freddie Mac currently provide a market for the vast majority of mortgages.

That’s why we’re bringing this story up again, this time adding a video news story that will air nationwide: we’re doing what we can to expose this scheme to the maximum number of people – and quash this dumb idea once and for all.

“It’s a pretty slick way to make money, but it’s bad public policy and bad for consumers,” Kurt Pfotenhauer, chief executive of the American Land Title Association, told The Washington Post last month.

We couldn’t agree more. If you’re planning to buy a house and don’t live in the one of the states listed above, ask about these fees – because if you get stuck with one, it’s for life.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
10 Bad Money Habits That Are Robbing You Blind
10 Bad Money Habits That Are Robbing You Blind

Here’s how to change those bad behaviors.

9 Free Things That Used to Cost Us Money
9 Free Things That Used to Cost Us Money

Not everything is getting more expensive.

8 Ways to Slash Your Internet Bill
8 Ways to Slash Your Internet Bill

No matter what price you are paying for internet service, taking these simple steps can lower it.

Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?
Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?

You could save more than $30,000 by setting aside these costly expenses for just one year.

These 13 States Tax Social Security Income
These 13 States Tax Social Security Income

Uncle Sam is not the only one looking for a piece of your retirement income. Is your state on this list?

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Mistakes Everyone Makes When Shopping on Amazon
9 Mistakes Everyone Makes When Shopping on Amazon

Are you losing money due to any of these missteps?

7 Changes Coming to Social Security and Medicare in 2021
7 Changes Coming to Social Security and Medicare in 2021

Recently, both Social Security and Medicare made some major announcements about benefits for 2021.

Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?
Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?

The rules are complicated when it comes to eligibility for survivors benefits.

Can a Twice-Divorced Woman Claim Social Security Survivors Benefits?
Can a Twice-Divorced Woman Claim Social Security Survivors Benefits?

Understanding survivors benefits rules is the key to getting the most from your benefit.

These Are the 10 Worst Cars for Depreciation
These Are the 10 Worst Cars for Depreciation

Two types of vehicles are especially likely to see steep plunges in value.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

10 Things I Always Buy at Trader Joe’s
10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

Longer Trips to This Type of Store May Raise Coronavirus Risk
Longer Trips to This Type of Store May Raise Coronavirus Risk

An airborne-disease expert recommends exiting these stores within 30 minutes.

5 Ways Social Security Will Change in 2021
5 Ways Social Security Will Change in 2021

These adjustments will affect both workers and retirees in the new year.

11 ‘Disposable’ Items You Should Be Reusing
8 Things You Should Buy at Restaurant Supply Stores
8 Things You Should Buy at Restaurant Supply Stores

You don’t have to be a chef or a restaurant owner to shop here.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

There are easy high-paying majors available in the U.S. — and no bachelor’s degree is required. We’re here to help you find easy degrees that pay well.

Stop Buying These 19 Things Online
Stop Buying These 19 Things Online

The internet has changed how we shop. But for some things, you’re still better off buying the old-fashioned way.

Cut These 11 Expenses Now If You Hope to Retire Early
Cut These 11 Expenses Now If You Hope to Retire Early

Like the idea of financial independence? Part of the FIRE equation is cutting costs.

27 Things You Should Never Pay For — and How to Get Them for Free
27 Things You Should Never Pay For — and How to Get Them for Free

When you know the tricks, you can save big on all kinds of useful things that others pay for.

4 Tax Credits That Will Be More Generous in 2021
4 Tax Credits That Will Be More Generous in 2021

If you are eligible for these tax breaks, they will slash your federal income tax bill — dollar for dollar.

7 Tips for Building an Emergency Food Supply
7 Tips for Building an Emergency Food Supply

A pandemic or natural disaster could leave you reliant on your existing emergency food supply. Is your pantry well-prepared for emergencies? Knowing what to stock up on for emergencies can be a difficult task and we’re here to help.

15 Things You Can Get for Free in December
15 Things You Can Get for Free in December

December is here, which means it’s your last chance to take advantage of fabulous freebies in 2020.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.