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Transfer Tax

May 2014

Hausfeld LLP and its co-counsel have filed putative class action lawsuits on behalf of Wyoming County, West Virginia; Montgomery County, Ohio; Henderson County, North Carolina; and Spokane, Washington for unpaid transfer taxes. The lawsuit alleges that the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Federal Housing Finance Agency (“FHFA”), as conservator of Fannie Mae and Freddie Mac, have sold tens of thousands of homes that it has foreclosed on or otherwise acquired in West Virginia, Ohio, North Carolina, and Washington and that Fannie Mae and Freddie Mac have illegally claimed to be exempt from the payment of local transfer taxes in these states. Consequently, the complaint alleges that these entities owe municipalities in West Virginia, Ohio, North Carolina, and Washington years of back-owed transfer taxes.

Transfer taxes are an excise tax levied on the transfer of real property. Thirty-six states and the District of Columbia require the payment of this excise tax on real property transfers. Depending on the jurisdiction, transfer taxes can be levied by the state, counties, and/or municipalities within the state.

This lawsuit follows a recent opinion by the Eastern District of Michigan granting summary judgment to Michigan counties seeking unpaid transfer taxes from Fannie Mae, Freddie Mac, and the FHFA. See Oakland County v. Fed. Hous. Fin. Agency, 2012 WL 1658789 (E.D. Mich. May 11, 2012). In this opinion, the Court specifically addressed whether the term “all taxation” in the federal statutes creating Fannie Mae and Freddie Mac exempted these entities from excise taxes (such as the transfer tax at issue), and concluded that “[b]ecause there is a presumption against implied tax exemptions, and ‘all taxation’ has been implied to mean ‘direction taxation,’ and the Michigan Transfer Taxes are an excise tax rather than a direct tax, Defendants are unambiguously liable for the Transfer Taxes.” (emphasis added).  The court also found that Fannie Mae, Freddie Mac, and the FHFA were not exempt under Michigan law, reasoning that these entities were not “federal instrumentalities” but essentially “privately owned mortgage banker[s].” Fannie Mae, Freddie Mac, and the FHFA are presently appealing the Michigan decision to the Sixth Circuit.

If you are a state, county, or municipal official and you believe that Fannie Mae and Freddie Mac have illegally claimed to be exempt from the payment of transfer taxes in your jurisdiction, or if you are a consumer that believes you were wrongfully forced to pay transfer taxes when you bought a property from Fannie Mae or Freddie Mac, please contact James Pizzirusso at (202) 540-7200 or jpizzirusso@hausfeldllp.com to discuss your legal rights and options.

 

 

Practice Areas: Securities and Financial Services

 

Supporting Documents

» WV Fannie Mae Complaint (PDF)
» Order Granting Plaintiffs' Motion for Summary Judgment (PDF)
» FL County v. Freddie Mac Complaint (PDF)
» Sixth Circuit Order (PDF)
» Goode Complaint (PDF)
» Montgomery County Complaint (PDF)
» Henderson County Complaint (PDF)
» Oakland County - Order Granting Summary Judgment (PDF)
» North Carolina v. Fannie_First Amended Complaint (PDF)
» Ohio V. Fannie - Consolidated Amended Class Action Complaint (Filed) (PDF)
» Washington v. Fannie (PDF)
» WestVirginia_Amended Complaint (PDF)

 

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