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Hausfeld LLP Files Ohio Class Action Lawsuit Against Fannie Mae and Freddie Mac For Unpaid Taxes

DAYTON, OH (July 25, 2012) – Hausfeld LLP along with Montgomery County, Ohio Prosecuting Attorney Mathias H. Heck, Jr. today announced the filing of a class action lawsuit on behalf of the Montgomery County Board of County Commissioners and all other counties in Ohio to recover millions of dollars in unpaid transfer taxes from the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).  The lawsuit was filed in federal court in the Southern District of Ohio.  

Transfer taxes are monies owed when a new deed is recorded with the county.  In Ohio, there is a statewide, mandatory transfer tax of $1.00 for every $1000 of value being transferred; in addition, each county has the option of enacting a transfer tax of up to $3.00 for every $1000 of value being transferred.  These taxes are a significant source of funds for local governments in Ohio.  Montgomery County, home to Dayton, Ohio, has one of the highest foreclosure rates in the State.

According to the lawsuit, Fannie Mae and Freddie Mac, despite receiving more than $183 billion in federal bail-out funds, have wrongfully claimed various exemptions from the payment of these transfer taxes in Ohio.  The lawsuit asserts that Fannie Mae and Freddie Mac should have paid transfer taxes on both deed transfers to them from banks that foreclosed on homes, as well as on deed transfers from Fannie Mae and Freddie Mac to new homeowners.  Between 2002 and 2008, however, Fannie Mae and Freddie Mac wrongfully claimed to be exempt as “government instrumentalities” and for an unspecified period of time, Fannie Mae and Freddie Mac claimed other inapplicable exemptions, as well.  The lawsuit points to a recent memorandum from the Ohio Department of Taxation warning county auditors that “[t]ransfers involving Fannie Mae/Freddie Mac should be closely scrutinized to assure that the exemption identified provides a valid reason for the non-payment of conveyance fees.”

Montgomery County’s lawsuit follows the success of Michigan counties who filed a similar lawsuit against Fannie Mae and Freddie Mac.  On March 23, 2012, a Michigan federal court granted summary judgment to the Michigan counties finding that Fannie Mae and Freddie Mac owed transfer taxes under Michigan’s transfer tax law concluding that the “Defendants are unambiguously liable for the Transfer Taxes.”  Since that ruling, counties and cities in at least nine other states have filed similar lawsuits.  While Summit County, Ohio has filed an individual case, Montgomery County’s lawsuit is the first case filed in Ohio seeking class action status for all other Ohio counties.  

Prosecutor Heck added, “Montgomery County and its homeowners have faced innumerable economic difficulties during the housing crisis.  Depriving the County of funds necessary to support essential services by illegally claiming tax exemptions that clearly do not apply, Fannie Mae and Freddie Mac have added to our citizens’ troubles.  This is yet another example of Fannie Mae and Freddie Mac piling as much economic hardship as possible on the backs of the hard working people of the State of Ohio.”

James Pizzirusso, a partner at Hausfeld LLP, said, “Fannie Mae and Freddie Mac are beginning to see the true costs of their dishonest business practices.  They have improperly avoided tens of millions of dollars in taxes that would have directly benefitted the citizens of Ohio.  Today’s filing shows that this type of conduct has consequences.”

Hausfeld LLP is representing other municipalities with similar claims and is one of the leading class action firms in the world with offices in Washington, DC; San Francisco, CA; Philadelphia, PA; and London, UK and affiliated offices around the globe.  A copy of Montgomery County’s Complaint will be available for download at:



Supporting Documents

» Complaint (PDF)