Miami-Dade County Joins Counties Across the US Suing Freddie Mac and Fannie Mae for Unpaid Transfer Taxes

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This week, Miami-Dade County sued Fannie Mae and Freddie Mac in the United States District Court for the Southern District of Florida in Case NO. 12-CV-23917, styled Ruvin v. Federal National Mortgage Ass'n et al. and Harvey Ruvin, Clerk of the Courts for Miami-Dade and the officially named plaintiff in the lawsuit may well have a winner on his hands. 

After all, up in Detroit, U.S. District Judge Victoria Roberts heard a similar complaint from Oakland County, Michigan, and ruled in the County's favor -- and in a summary judgment, no less.  And the State of Alabama is moving forward with a class action suit against the two mortgage institutions where all Alabama counties will group as plaintiffs seeking repayment of their recording fees from Fannie Mae and Freddie Mac. 

Miami-Dade is arguing that Fannie Mae and Freddie Mac are not government entities (and therefore exempt from paying these taxes) but instead private corporations.  If Harvey Rubin wins, then Miami-Dade County will recover 60 cents on every $100 of single family dwelling's value transferred to Fannie Mae or Freddie Mac when either of the mortgage financing companies took title to the properties. 

Expect more to come.

Meanwhile, over in Illinois, the Federal Housing Finance Agency has also filed a lawsuit in federal court.

There, FHFA is the plaintiff asking the federal court to rule that the State of Illinois and its counties cannot impose transfer taxes upon Fannie Mae and Freddie Mac.  (Read the FHFA News Release on this lawsuit online here.) 

DeKalb County, Illinois, and others have their transfer tax lawsuits on file, as well - FHFA has filed their suit in a Chicago federal district court in response to the Dekalb, et al filing in a Rockford federal court.  

It's an interesting question: what are Freddie Mac and Fannie Mae exactly?

Harvey Rubin argues that each of them are "federally chartered, private corporations" and that while they were originally established as " ... federal entities, during the period covered by this Complaint, they were and continue to be private, publicly traded corporations."

This is an important issue for Miami as well as South Florida since property taxes have fallen during this bad economic time and recouping this money would mean more funds in the local coffers.  How much?  It's not clear - but it is clear that this is going to be a long fight.

 

Published In: Administrative Agency Updates, Business Torts Updates, Finance & Banking Updates, Residential Real Estate Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Rosa Eckstein Schechter, Eckstein Schechter Law | Attorney Advertising

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