Fannie Mae and Freddie Mac are using tax-exempt status to escape county fees levied during the recording of foreclosure property transfers, two Michigan county leaders said in lawsuits this week.
Andrew Meisner, treasurer of Michigan’s Oakland County, and Oakland County Executive L. Brooks Patterson sued Fannie and Freddie in the U.S. District Court on behalf of taxpayers in their county.
Oakland County claims the GSEs owe area taxpayers more than $12 million in unpaid real estate transfer taxes on the sale of foreclosed properties, according to a press release from Meisner. Meisner told HousingWire he believes this is one of the first cases challenging the GSEs’ ability to claim exemption from fees on the grounds that they’re government agents.
In a statement, Meisner wrote, “Fannie and Freddie you quack like a duck (or a private corporate entity), so you better pay up.”
He added, “In this case, Fannie and Freddie walk, fly and quack like private companies, right down to the multimillion-dollar salaries for their CEOs. That means that they are not entitled to exemptions made for government entities.”
The Oakland County plaintiffs contend Fannie and Freddie are not exempt from Michigan’s real estate transfer tax, which requires parties transferring properties to pay $1.10 per every $1,000 in value to the counties, while the state receives $7.50 per every $1,000 per transaction.
In the suit, the Oakland County treasurer is trying to reclaim fees tied to 200 real estate transactions that occurred over a period of six years.
In the same state, the Ingham County Register of Deeds Curtis Hertel Jr. filed suit against the two GSEs, Bank of America (BAC: 10.52 0.00%), Wells Fargo (WFC: 27.26 0.00%), Countrywide Home Loans Servicing, and the law firms of Orlans Associates and Trott & Trott P.C.
Hertel claims the defendants tried to escape a transfer tax by moving the assignment of the mortgage. “What you see is literally within one or two months before a foreclosure is filed, they transfer assignment of the mortgage to Fannie and Freddie,” Hertel said. “Why would they do that right before the foreclosure is about to happen … obviously it is to avoid fees.”