The Latest Real Estate Scam... 09.09.10 | Vincent K. Mohr : First Priority Financial, Inc. : Fairfield, CA

FloridaGI: (October 22, 2010 2:45pm)

This exact scenario happened to me. As a military member, I transferred to NW Florida and bought a house in a subdivision with a HOA. The transfer fee was not disclosed to me until a bill for .5% of the selling price arrived three months AFTER the sale. Florida law has prohibited transfer fees unless they go to a 501(c) organization, such as the St Joe Community Foundation, as mine did. I'm most unhappy that I paid tax to the county and now I feel like I'm paying another tax to a "private charity" who is using the money to make their multiple NW Florida developments more attractive to potential buyers. I can't find any State requirement for disclosure, and the fee sure wasn't listed in the HUD settlement statement. Had I known about this hidden additional purchase price, I would have walked from the deal.

Robin in Reno: (September 16, 2010 3:53pm)

In Northern NV we have Transfer Tax it has been bumped x 10 times in the last few years. We also have transfer fees on HOA. Is this in addition? And is every one aware that the Obama Care Health Insurance plans stuck in a transfer fee starting too soon of 3% tax to the Fed? Inside Health Care...How is change working for you who voted this Communist/Socialist Sociopath into office! The Czars are alive and well in WA DC. Robin In Reno

DallasREpro: (September 11, 2010 5:39pm)

The government didn't get us here....It's GREED. Everyone wants to know how to get more money in their pockets...Raising taxes, creating a tax or a fee or some type of scheme. It's ridiculous!!!Until we learn how to work with what we have and stop focusing on what we don't have and who's the blame for it we will continue to struggle as a country and as individuals...Some of you need to stop blaming the President/Politicians for everything that does not go your way...

homebuyer: (September 10, 2010 9:59am)

Dumbrivblonde I would love to hear more about this experience. It sounds like the more stories we have from real people who've had these fees, the better equipped we are to stop them!

tony4loans.tx: (September 10, 2010 9:07am)

First of all, what are “repulicans?” I believe getting a Republican majority in the will HELP the Real Estate industry. Why? Because we need less “help” from the government. Recent solutions from Capitol Hill had no real impact. The current majority apparently focused on buying votes with tax dollars used for weak programs. The results are in, elections are coming up, & we’re in no better shape than before. A Republican majority is more likely to include input from business-minded people in their plans. We’re more likely to get solutions that’ll have lasting effects & enable the Real Estate Industry to properly manage their part of the recovery. If we’re able to regain our momentum, it will have a wonderful ripple effect throughout the economy. We need everyone to work hard, pay their taxes, & together, we can all have an impact on regaining what we once had. Tighter controls & enforcement of existing laws & regs will greatly limit the unethical behaviors of the past. Let's Vote!

sharonk: (September 10, 2010 8:29am)

I think the market will change the day Obama is voted out of office. He just doesn't get it. We should have naturally gone through the natural ebb and flow of the economic cycle and things would have been righted. I don't see light at the end of the tunnel until an experienced business person is leading the country. Love the show!

rlangley: (September 10, 2010 7:29am)

I think there will be some improvement, but not because of which party is in control,but because of what is going on now is not working. but I don't see any real improvement until we get back to how this country was built. by "We The People"! Which in this case are US, the people in the business. Not by politicians who know very little about how this business works. We somehow need to get them to walk in out shoes, or send someone there who has a voice for "We The People" Because it's going to take "We The People" to turn this mess around!

rlangley: (September 10, 2010 7:28am)

I think there will be some improvement, but not because of which party is in control,but because of what is going on now is not working. but I don't see any real improvement until we get back to how this country was built. by "We The People"! Which in this case are US, the people in the business. Not by politicians who know very little about how this business works. We somehow need to get them to walk in out shoes, or send someone there who has a voice for "We The People" Because it's going to take "We The People" to turn this mess around!

princessjb1: (September 10, 2010 5:46am)

Most likely there will be some improvement in the housing industry but how much improvement will depend on whether or not we get rid of the incumbents (both parties) & bring in candidates who are really working for the people to make a difference in the overall direction our country is headed.

petervd: (September 09, 2010 11:06pm)

Whether ye be King or Street Sweeper everybody has a date with the Grim Reaper..The ying and the yang of it will be a Republican House and Senate (barely) a boone for mortgage and Real Estate s l o w l y and devastating to the Stock Market..Peter Van Dam Broker in Silly Silicon Valley

deshelman: (September 09, 2010 9:50pm)

Actaully based on the 80% rule - Republicans are going to kick a donkey in Nov.

deshelman: (September 09, 2010 9:48pm)

If you discuss more than once do you increase your chances to win a HD camera?

deshelman: (September 09, 2010 9:47pm)

I just want to win a HD camrea.

dcessna: (September 09, 2010 8:13pm)

In Florida, this is called Community District Development Fees. Big problems coming with the large number of defaults. So far, no controls over CDDs. I'd like to hear your take on it.

Neal the Deal: (September 09, 2010 3:16pm)

Here in Oregon a petition is presently being circulated to prohibit any new real estate transfer taxes at the state and local level. To my knowledge there is only one county in the entire state that has transfer taxes. Go to ProtectOregonHomes.com for more info or to sign the petition. Thank You.

Fundem: (September 09, 2010 1:55pm)

Hey Loppy, how do transfer fees get back to the government? It is a fee, not a tax. This video is about a private enterprise money grab. Which party do you think is more likely to propose legislation getting rid of these transfer fees?

MyDenverMortgage.com: (September 09, 2010 1:49pm)

In Colorado we have a number of mountain towns which have transfer fees but it's disclosed in the Colorado real estate contract and is negotiable between buyer and seller. I've never heard about a expiration to those fees though...

loppy: (September 09, 2010 1:28pm)

There are no limits on the thirst for gov't for fees. It is proportional to the lack of restraint shown on spending.

Lou.M: (September 09, 2010 12:54pm)

Washington DC has a transfer and recordation tax on ALL properties regardless if they are new or 100 years old. Properties under $400k the tax is = to 1.1% of the sales price, over $400k it is 1.45%. The buyer pays the transfer tax and the seller pays the recordation tax on each transaction. I have seen new construction contracts make the purchaser pay both sides. Of course that language was buried deep within the builders contract. Can't say that the transfer or recording fees have stopped sales or lowered prices any since DC is a transient, and happening city. Even still, it is an eyeball roller no matter which side of the table you sit on! No matter how many times that property has been sold, it will appear as a line item. Also, if you wanted to add a name to the deed, the transfer tax is required. I always wonder why there are property taxes to be paid in the same year as a purchase/sale....Taxes and parking tickets, DC is the best at collecting!! Sorry I digress!

howdo: (September 09, 2010 12:15pm)

Here in WA State we have the same racket. But it is at the hands of the State. Everytime you sell a house the SELLER is charged about 2% of the total sales price. When ever the State needs more money to spend, they keep raising the amount. Incidous and underhanded to say the least. It's a sneaky trick played out on the residents of WA by the scheming politics of a one party State (Democrats) for over 20 years. It's a bane on home ownership and a never ending deep well for the politicans whose every crazy idea int this state gets enacted into legislation. Now WA is one of the most expensive states in the Union to buy and sell real property. When will it ever end. Most of Western WA home owneres work for the government, MS or Boeing, and by the nature of that work they are transfered frequently. Talk about a rip-off, this beats it all.

xxbigmikexx: (September 09, 2010 11:44am)

The transfer fee is the only "fee" that will lower the cost of the home. Lower acquisition costs = Lower carrying costs. Lower carrying costs = Faster equity growth. If you compare 2 identical houses, one without a transfer fee and one with...The home with the transfer fee will always be more beneficial to the buyer. Frank and Brian, You are basing your decisions on fallacy, aka. A flaw in the critical thinking process. Transfer fees are an alternative way for the builder to make money. Builders that want to make money are shady. (your assumption) Therefore, Transfer fees are shady and criminal. This is incorrect reasoning. Whether transfer fees are good or bad relies 100% on benefit and burden. Builders being shady or not is irrelevant. (Side Note) In understanding transfer fees, this Joseph guy had his property exempt from the transfer fee when he sold because he would have been paying the fee to himself. Media really can make even smart people believe anything.

barryl: (September 09, 2010 11:01am)

1% TRANSFER FEE: VERY GENEROUS; IN NYC ITS CALLED A TRANSFER AND MORTGAGE TAX: HERES HOW IT WORKS. 500,000 OR GREATER LOAN- TRANSFER TAX IS 1.425% TO THE SELLER, AND THE BUYER GETS TO PAY A GENEROUS 2.875% MORTGAGE TAX. THESE 2 HUD ITEMS EQUAL THE ANNUAL INCOME OF A GENEROUS PART TIME JOB. THE GOOD NEWS IS: NEVER NOT DISCLOSED AND EVERYONE GETS TO PAY IT!

bdavies: (September 09, 2010 10:58am)

i'm not in favor of it, but it sounds alot like mortgage transfer tax which we pay every time a transaction takes place! Bill in New York

rlittlefield: (September 09, 2010 10:57am)

The transfer fees should be illegal. The contractual agreement should not be attached to the loan documents. How can you agree to something if you do not know about it.

Dumbrivblonde: (September 09, 2010 10:37am)

I had this happen on a short sale. I had no idea this fee was there until ready to close. The seller had no idea this fee was there. They buyer ended up paying it, but what a scam! The seller was a loan underwriter, she understood the transaction, it was never disclosed to her.

Daniel L: (September 09, 2010 10:33am)

Frank & Brian, I believe that this tactic started with the enviro-terrorist, such as the Sierra Club and Green Peace as a funding mechanism for their groups. They would blackmail a builder, saying that they would oppose their projects, and keep them tied up in litigation unless the builder would insert the "sales tax" with those groups as the beneficiaries.

5pence: (September 09, 2010 10:30am)

Nor does the evil stop here. These ebbs & flows in the currency & these indiscreet extensions of credit naturally engender a spirit of speculation injurious to the habits & character of the people. We have already seen its effects in the wild spirit of speculation in the public lands & various kinds of stock which within the last year or two seized upon such a multitude of our citizens & threatened to pervade all classes of society & to withdraw their attention from the sober pursuits of honest industry. It is not by encouraging this spirit that we shall best preserve public virtue & promote the true interests of our country; but if your currency continues as exclusively paper as it now is, it will foster this eager desire to amass wealth without labor; it will multiply the number of dependents on bank accommodations & bank favors; the temptation to obtain money at any sacrifice will become stronger & stronger, & inevitably lead to corruption, which will find its way into your public councils and destroy at no distant day the purity of your Government.

5pence: (September 09, 2010 10:28am)

Andrew Jackson 1837 farewell address: The paper system being founded on public confidence & having of itself no intrinsic value, it is liable to great & sudden fluctuations, thereby rendering property insecure & the wages of labor unsteady & uncertain. The corporations which create the paper money can not be relied upon to keep the circulating medium uniform in amount. In times of prosperity, when confidence is high, they are tempted by the prospect of gain or by the influence of those who hope to profit by it to extend their issues of paper beyond the bounds of discretion & the reasonable demands of business; and when these issues have been pushed on from day to day, until public confidence is at length shaken, then a reaction takes place, & they immediately withdraw the credits they have given, suddenly curtail their issues, & produce an unexpected & ruinous contraction of the circulating medium, which is felt by the whole community. save themselves, and the mischievous consequences of their imprudence or cupidity are visited upon the public.

bobc2799: (September 09, 2010 10:16am)

I'm part of the 3% that voted that transfer fees are okay. I've only been in Real Estate for 15 years but in that short time I have done a lot of loans for people that "forgot" the terms of the loan and were "shocked" when they sold or tried to refinance. "Prepayment penalty?-I never agreed to that!" "What do you mean the loan adjusts?" "You mean 1% wasn't the actual interest rate? (on pay options)." I always get signed documentation confirming that I explained the options when closing a loan. It protects me against future amnesia. I find it amazing that when people buy something they're an expert but when they try to sell it and find out that there might be a problem, they become an innocent victim. If people stopped buying houses with transfer fees then companies would stop selling them with transfer fees. Let the market decide.

bg: (September 09, 2010 10:15am)

THIS IS NOT TRUE IN FLORIDA. AGAINST THE LAW!

BobbyC: (September 09, 2010 9:36am)

I wonder who was in the 3% that voted yes? Hmmmmm!

Daggone: (September 09, 2010 9:00am)

BULL!!! If a developer does not have the money to develop the land, he needs another job! Defending this practice by saying they are not charging all they could to develop is a ridiculous argument. Reminds me of how the taxpayers in Cincinnati are buying a stadium for the Brown family! Disgusting! I've not run into this, but you can bet I'll be on the lookout for it when my borrowers buy a new construction.

mirandaestates: (September 09, 2010 9:00am)

I live in a community called Verrado in Arizona which is currently being developed by DMB Inc. All of the homes have a half of 1% "community reinvestment" fee with each sale. The money is suppose to be reinvested back into the subdivision. Since the market crash about 50% of the homes have flipped but we have not seen any new community services added or developed.

bjacenko: (September 09, 2010 8:59am)

I believe that Barney Frank and Christopher Dodd make up the 3% that in favor of transfer fees.

Utah Mortgage&Real Estate Guy: (September 09, 2010 8:50am)

There is one big issue that isn't being discussed in regards to the transfer tax fee. "Seller and Listing Agent MISREPRESENTATION by not disclosing this fee". California, is probably the only state, that has addressed the transfer fees in the standard REPC forms. All the other states that don't have these forms available for their agents to help disclose property tranfer fees are putting ALL Sellers and their Real Estate Representative Agents in jeopardy of MISREPRESENTATION LAWSUITS. Obviously there is no way to tell, but I would think there are (or are going to be) a ton of Property Owners SUING the seller and their real estate agents for not disclosing these fees properly. Not to mention, as Frank & Brian discussed, the current property owners that may not be able to sell their properties when the financing guidelines catch up to these scams. If and when the guidelines change, you will see a huge amount lawsuit filings.

seancurrent: (September 09, 2010 8:13am)

Is a transfer fee the same thing as a Charitable Endowment fee, 1/20th of 1% of sales price paid by seller everytime a home is sold. I bought new home in 2005...500 homes built by Lennar in Carlsbad, CA. They each have this Lennar Charitable Endowment fee assigned to each home upon sale, money for this Endowment fee, although I have no idea to what charities this money goes.

SCVrealtor: (September 09, 2010 8:08am)

Private Transfer Fees were discovered in California a couple of years ago in newer construction residential developments. Calif. Assoc. of Realtors created the Notice of Private Transfer Fee disclosure that is mandatory on all 1-4 unit transactions. The fee is typically embedded in the title report. Our local association required all the homebuilders to fess up and report which of their developments carried the fee to make our lives easier. The only one I know of for sure is Lennar.

DFWAMP: (September 09, 2010 7:56am)

Castle Hills in DFW has a 1/2% transfer fee that funds a Foundation that contributes money to area schools. http://www.castlehills.com/schools.php At least it helps the kids and schools.

jcollins: (September 09, 2010 7:49am)

FRANK&BRIAN: I never did hear back from you guys regarding the web a go go. are you doing anither one or was it recorded?

mvigil: (September 09, 2010 7:46am)

I remember when investors were selling this scheme several years ago, they were making presentations to large audiences saying it was a perfectly legal way to make money for the next 99 years. Buyer beware...

jcollins: (September 09, 2010 6:59am)

when will respa step in and make of disclose this fee? I guess I have to say that the builder should be bale to do it . but, it should be disclosed on the disclosure form. Also, how does it stick with the property after the first buyer sales? if it is in the loan docs then it should be removed after the first refi or sale.

rpoetesq: (September 09, 2010 6:58am)

Sounds like a restraint on alienability to me. I did not read anything of the laws or regulations that allow this but if builders can do it what prevents anyone from recording this to the title of their own property?

SoldinOregon: (September 09, 2010 6:53am)

Oregon is putting a measure on this years ballot to prohibit Gov't transfer fees on Real Estate. You can see more about what we are doing at ProtectOregonHomes.com if interested. Any transfer fees should be illegal...

100' Tape: (September 09, 2010 6:48am)

Homeowners should read the documents before they get to the closing table. At some point, folks who put themselves in trouble by being stupid need to accept the fact that they did it to themselves.

Utah Mortgage&Real Estate Guy: (September 09, 2010 6:28am)

There needs to be clarification between Transfer (SALE) Fees and Transfer Tax Fees. Thist story is about Transfer Fees paid to a beneficiary that typically has ties to the developer. The TRANFER TAX FEES that a few of you are discussing are paid to the local city, county or state. 31 States have Transfer Tax Fees. Other states don't charge a transfer tax, but the owner/seller will pay more money in title, escrow, or attorney's fees. Example: $400,000 sale in Nevada, Title/Escrow Fees $550, Tranfer Tax Fees $3500. In Utah, Transfer Tax Fees $0, Title/Escrow Fees $2200. The fees are different for too many different ways to expain in this short post, but in short, EACH STATE HAS DIFFERENT LAWS.I can understand why some would think these are similar, but they are different in one glaring way. The states that have tranfer tax fees, it is disclosed to a potential buyer/owner in many different ways and in many cases it is LAW.The ILLEGAL transfer fees are often hidden and misrespresented

Calvin the Airedale: (September 09, 2010 6:19am)

As a way to avoid showing a change in title for high value commercial properties, in some states owners are putting title in the name of a shell LLC and then transferring ownership of the LLC instead of the RE title. It is perfectly legal and avoids tipping off taxing authorities as to the change in price since title on the property never actually changes. Might this strategy defeat the private transfer tax?

tbwbrian: (September 09, 2010 6:12am)

I see this as criminal and a flat out assault on our industry and recovery. this is a flat out money grab that needs to be stopped. this guys in Austin Texas which I'm flying to at this very moment. I hope he or his reps come to the Texas Ass of Mortgage Pro's meeting. We'll offer him a public forum to explain his agenda. Doubt it though.

GaryP: (September 09, 2010 6:11am)

Are HOA transfer fees affected by this change? That's the only such fee that I commonly see in my market.

Old School Mortgage Banker: (September 09, 2010 6:03am)

Great job on the follow up to this crime guys! I did some research after you first brought it up and discovered that Freehold Capital Partners was behind this for the most part. What blew me away that was just ROFLMAO funny was Freehold's claim that the development of a subdivision was a "work of art" akin to writing a book or a song and that developers should be allowed to collect similar royalties as writers and musicians! What a crock of S*$.... It's bad enough that some States and Municipalities do this but at least those revenues are going to the so called common good and not lining a private individual or company's pocket.

cjtaz: (September 09, 2010 6:00am)

It's called a Private Transfer Tax in CA. Here's the back story no one is talking about, several enviornmental groups used this to blackmail builders by threatening to take them to court and delay their projects for years. In many cases the builder does not get the fee the Sierra Club or some other non profit gets this fee. It was so rampant in CA that CAR actually has a disclosure form for this and we must check title on every house built after 2000. The fee is negotiable in CA so as you pointed out depending on the market the buyers paid it in 2005 as part of their closing costs!

007 license to sell: (September 09, 2010 5:59am)

Nevada has had a transfer tax for years, it's not right and it would be great if they would get rid of this tax.

T00_Cute: (September 09, 2010 5:32am)

I first heard of this, when I was helping my daughter buy her house (2006 California). Lennar put it down as a charitable organization. When explaining it they told her "you don't have to pay for it again.. the new buyer does and it goes to charity" After she already picked out her flooring and was emotionaly in the deal. The way it was presented was like she was bad for even thinking of not going through with the purchase, what kind of person doesn't give to charity "it is for a good cause". Of course she went through with it and when her house tanked 200,000.00 and she lost her job. They foreclosed on her house. She (and the Bank) were being sued by the charitable organization for loss of revenue (because when foreclosed there was no money transfer just title). I don't care how you dress it.. it is wrong! Bad Business. (check your Lennar homes it was popular in California).

panhandlenan: (September 09, 2010 5:15am)

S Tennell- the homes that have them attached prior to 2008 are still collecting them at closing. One specific sub division comes to mind. The law did not go far enough.

marshakirven: (September 09, 2010 4:58am)

I have never heard of these transfer fees in the state of Kentucky. We have a transfer "tax" on every transaction, but it is only a $1 per thousand. Are these in the state of Kentucky?

s_tennell: (September 09, 2010 4:51am)

Florida banned this practice effective July 1, 2008. For those states that wish to lobby for a law change, below is the link of the Florida Statute. http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0600-0699/0689/Sections/0689.28.html

Broker in RIC: (September 09, 2010 4:43am)

Just for clarification, lenders pre-payment fees are not seen in today's market -- they were a subprime thing -- and rarely, if ever had more than 3 year window of validity. Not advocating lender PPPs, but just stating that they couldn't hurt Joe Homeowner selling and moving every 5-7 years. Quite different than the someone who finds out that they owe 1% upon selling after living in the house 11 years...

RJOPUS: (September 09, 2010 4:30am)

Devil's Advocate-I First Met with these guys in May of 08 (checked my gmail) First, I guess they've done well to make it on TBWS :-)...back then my first thought was "this makes sense" the fact that these can be monetized to produce project funding capital would limit the amount of developer foreclosures and allow more project completions with less stress on banks (translation: Jobs, Growth, completed projects) and any Professional Agent(any left?)should be able to disclose this to any prospective buyer up-front or sell a different property - Also, lets be real for a second - Agents spliting 5-6% off of the property appreciation for showing a property and stressing out there TC's (as most now days do) would give up .50 bps or even .25 bps to make a deal happen - that seems to be a small price to pay for what this (in theory) would produce in jobs and capital infusion hmm .50 bps to an agt or to a developer? Scam? not sure-as a banker making 3% I'll give up.25 bps to help create a job.

Michigan Appraiser Pro: (September 09, 2010 3:51am)

Michigan has had a tranfer tax since approximately 1993. As the years progressed the builder's started only transferring the land and then completed an additional building contract. They would only pay taxes on the land! Another surprise, Government enities are exempt. Example: FNMA, HUD

Michigan Appraiser Pro: (September 09, 2010 3:50am)

Michigan has had a tranfer tax since approximately 1993. As the years progressed the builder's started only transferring the land and then completed an additional building contract. They would only pay taxes on the land! Another surprise, Government enities are exempt. Example: FNMA, HUD

Deb Tomczak: (September 09, 2010 3:18am)

Where is the transfer fee captured on the HUD?

Florida Realty Builder: (September 09, 2010 3:05am)

Just out of curiosity, why is this only on new homes? I do kind of understand it for new home builders because in the current market, they are constructing homes for less then their costs or at cost in order to be somewhat competitive with the highly depressed prices of resales. I don't necessarily agree with it but when you look at it from that prospective then it's more respectable then asking the tax payers for a bailout...right? Hasn't the lending industry had a similar gimmick over the years?

iam 2520: (September 09, 2010 1:11am)

Lifetime Realtor Fee would be nice...Equity participation fee. Lenders could have... pre-payment fees, oh yea they already have one of those. Got to have SOME sort of benefit (s) upfront, unless you are just implying it was buried in the paperwork. Wonder if they would mind or even catch a change a homebuyer made in their paperwork that they signed at closing ...

Realist 1: (September 09, 2010 12:47am)

This is just another example of Legalized Crime.