More than 2,600 people and organizations responded to the Federal Housing Finance Agency's call for comments on its proposal to prohibit Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from buying mortgages tied to homes in communities with private transfer fees. However, it remains unclear whether the outpouring of comments will have any affect on the proposal, which could jeopardize scores of sales in new-home communities.

A private transfer fee is a one-time fee, usually a fraction of 1% of a home sale price, assessed to the seller when a home is sold. Proponents of transfer fees argue that the fees are an essential tool in the development and maintenance of communities across the country, supporting entities and causes such as homeowners associations, affordable housing initiatives, and environmental conservation. However, critics see the fees as a way to provide an alternative revenue stream to developers.

While both sides of the debate were represented in the comment stream, the majority appeared to be from stakeholders who argued that the proposal was far too sweeping and, if enacted, could further destabilize the housing market by negatively affecting the saleability of as many as 11 million properties nationwide. Included in that figure are homes in some of the largest, most well known master planned communities in the country such as Victoria Park in Florida, Newhall Ranch in California, and Summerlin in Nevada.

Debate over the use of transfer fees has been ongoing at the state and local levels; currently at least 17 states have legislation in place to restrict the use of such fees.

"We knew what was going on in California and there was the bill in Arizona, so we knew it was an issue with the Realtors," said Jill Kusy Hegardt, vice president of entitlements for Arizona-based mixed-use developer DMB Associates, of the controversy over transfer fees. "But what caught everyone off guard was that the federal government was getting involved."

Concerned over the potential fallout from the proposed regulation change, Kusy Hegardt helped pull together a 34-organization coalition, known as the Coalition to Save Community Benefits, to submit a comment opposing the FHFA's proposed regulation change. The coalition's letter asked the FHFA to not only extend the comment period until Jan. 31, 2011, but also to consider narrowing the scope of the transfer fee regulation to exempt community benefit recipients, such as homeowners associations, environmental groups, and other not-for-profits.

This is similar to a bill that Congresswoman Maxine Waters (D-Calif.) proposed in late September. H.R. 6260, known as the Homeowner Equity Protection Act of 2010, would prohibit the collection of private transfer fees for for-profit organizations, which means developers could no longer turn the fees into a revenue source.

Despite the close of the FHFA's official comment period on Oct. 15, it's unclear when any resolution on the issue could come. The FHFA has yet to outline its comment review process.

"I have not even sure what happens next," said Kusy Hegardt.