REBNY’s Flip Tax Campaign Pays Off

NEW YORK CITY-The Real Estate Board of New York on Wednesday credited a letter-writing campaign by its members with helping to persuade the Federal Housing Finance Agency to change its mind about Fannie Mae and Freddie Mac lending in buildings with a flip tax, or private transfer fee. Separately, Rep. Anthony Weiner (D-NY), who had also lobbied the agency this past October, expressed relief that the FHFA’s modified ruling will allow apartment buyers continued access to the lending programs.

With flip taxes—technically not taxes at all—most commonly paid to New York City homeowner associations, condominiums, cooperatives and certain tax-exempt entities that use private transfer fee proceeds to benefit the property, the issue was seen as especially important to the city’s multifamily sector. The FHFA guidance issued Tuesday exempts sales in these types of properties from its proposed ban on GSEs investing in mortgages with private transfer fee covenants.

“Barring lending in buildings with a flip tax would have had devastating consequences for New York City’s residential sales market,” REBNY president Steven Spinola says in a release. “We’re thrilled that as a result of our efforts, buildings with a flip tax are now exempt from the FHFA’s proposed ruling.”

Spinola says the 629 letters from REBNY members represented more than a quarter of the input that FHFA received. He also credits the city’s Congressional delegation, in particular Weiner, who took the lead on the flip tax issue.

"This was a case of a clearly unintended consequence that the agency wisely avoided,” Weiner says in a statement. “Flip taxes are important and fair for co-ops in New York City. A ban would have been disastrous. I'm pleased with the final rule."