Two counties in Michigan say the state’s public schools lost tens of millions of dollars because Fannie Mae and Freddie Mac failed to pay the state’s property-transfer tax. Because the government-backed mortgage giants own thousands of homes in the state, they are responsible for paying taxes that fund the school systems.
Counties Say Lenders Owe Back Taxes, Lenders Say They’re Exempt
Michigan has struggled with tax issues over the past few years and Fannie and Freddie play a large role. After the foreclosure crisis forced many homeowners out of their homes, the lenders, which owned the mortgages, became responsible for them–and the tax that came in tow.
The tax, which is $8.60 on every $1,000 of a property’s sale price, is the responsibility of homeowners. In this case, with Fannie and Freddie owning the homes, the tax on each foreclosed home was their responsibility.
However, the publicly-traded companies have noted that since they are also government entities, they are exempt from the tax and don’t need to pay. As a result, Oakland County says it has lost $1.5 million in taxes over the last six years and the state has lost $10.5 million in Oakland County.
Ingham County also says it has lost millions of dollars in damages and the state has lost tens of millions in the county.
Counties File Suit Against Fannie and Freddie
To recoup the losses over the past six years, the two counties have filed lawsuits against Fannie and Freddie–Oakland County’s lawsuit was filed on Monday and Ingham County’s on Wednesday.
In Oakland’s lawsuit, only Fannie and Freddie were cited, but in Ingham’s suit, several banks and mortgage services were also cited. The county said these banks and services, which include Bank of America and Wells Fargo, sold mortgages to Fannie and Freddie right before they were sold to buyers in an effort to avoid the state transfer tax.
Both counties say the loss in taxes has severely affected the state’s public schools, which lost tens of millions as a result.
They hope the lenders will be held responsible for the back taxes. Ultimately, however, the courts will have to decide whether Fannie and Freddie fall into the category of government or privately-owned entities, which will determine their responsibility in paying taxes on the properties.
I am sure our senators and congressmen got well paid for their shares of Fannie and Freddie that they own and that seems to be all our elected officials are interested in that being their own personnal bottom line.