Fannie Mae Found Exempt From Maryland County Transfer Tax
The ruling yesterday by U.S. District Judge Deborah Chasanow is the latest in a line of similar suits across the country brought against Fannie Mae and Freddie Mac to recover the taxes. Most judges have ruled in favor of the home-mortgage finance companies, Chasanow said in her opinion.
“There will be an appeal,” Don Springmeyer, a Las Vegas- based attorney for Montgomery County, said in an e-mailed statement.
Springmeyer, who is handling cases against the government- owned companies in seven other states, said he expects the U.S. Supreme Court to eventually decide the issue. He said localities could recover from $500 million to $1 billion.
In her ruling, Chasanow said the language of the companies’ congressional charters, exempting them from “all taxation” imposed by state and local governments is clear and “‘does not leave room for unmentioned exceptions.’”
In one case in which Fannie Mae and Freddie Mac (FMCC) were found liable for the real estate levies, a federal judge in Michigan ruled in March 2012 that the exemption from “all taxation” does not apply to excise taxes, which are imposed on the use or transfer of property, not on the property itself.
Oral arguments in the mortgage companies’ appeal of that ruling are slated for tomorrow in the U.S. Court of Appeals for the Sixth Circuit in Cincinnati.
The Montgomery County complaint also named the Federal Housing Finance Agency, which took Fannie Mae and Freddie Mac into U.S. conservatorship in September 2008 after the government bailed out the companies.
Fannie Mae and Freddie Mac own or guarantee $5.2 trillion in mortgages and back more than two-thirds of mortgages currently being originated.
Andrew Wilson, a spokesman for Washington-based Fannie Mae, and Brad German, a spokesman for MacLean, Virginia-based Freddie Mac declined to comment on the suit. Corinne Russell, a spokeswoman for the FHFA, didn’t immediately respond to phone request for comment.
The case is Montgomery County, Maryland v. Federal National Mortgage Corp., 13-cv-00066, U.S. District Court, District of Maryland (Greenbelt).
The appeals court case is County of Oakland v. Federal Housing Finance Agency, 12-2135, U.S. Court of Appeals for the Sixth Circuit (Cincinnati).
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