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
Drivers Give These 5 Car Insurers the Highest Marks
Drivers Give These 5 Car Insurers the Highest Marks

One company claimed the top ranking in several categories.

11 Small Money Moves That Will Make a Big Difference
11 Small Money Moves That Will Make a Big Difference

These small money moves will pay off big in the long run.

10 Common Ways Seniors Get Scammed
10 Common Ways Seniors Get Scammed

Here’s what to watch for to make sure you don’t fall prey to some of the biggest rip-offs targeting seniors.

8 Amazon Picks Under $30 for Coffee Lovers
8 Amazon Picks Under $30 for Coffee Lovers

We’ve brewed up a list of amazing Amazon products that are sure to perk you up.

How to Invest in Real Estate for as Little as $500
How to Invest in Real Estate for as Little as $500

If stock market volatility has you looking for other investment options, here’s a way to diversify — even if you don’t have tons of money.

View this page without ads

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

Get Started

Most Popular
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.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

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

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

9 Deep Discounts Available on Amazon This Friday
9 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

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.

7 Surprising Features That Boost Your Home Value
7 Surprising Features That Boost Your Home Value

You can add value to your home without hiring a contractor to do expensive renovations.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

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.