FHFA Reinstates Private Transfer Fee Covenants Exception

FHFA has issued a final rule making a technical amendment to its Private Transfer Fee Covenants (PTFC) Regulation. This amendment reinstates “grandfather” exceptions that were inadvertently removed during a 2024 rulemaking process (See prior WBK coverage). The reinstatement addresses industry concerns that the omission created uncertainty for lenders, title insurers and prospective purchasers concerning the eligibility of mortgages encumbered by older PTFCs for purchase or securitization by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

By restoring these provisions, the FHFA ensures that the restrictive PTFC Regulation continues to apply only prospectively. Specifically, the reinstated exceptions cover mortgages on properties where the PTFCs were created before February 8, 2011, or those created after that date pursuant to certain pre-existing settlement agreements or government-approved plans.

This final rule is effective March 17, 2026, with the reinstated exceptions applicable retroactively beginning July 16, 2012.