Force Mortgage Giants to Pay
Mortgage industry giants Fannie Mae and Freddie Mac always have been quasi-government entities. Now, after tens of billions of dollars in taxpayer bailouts to keep them afloat, they are known officially as “government-sponsored entities.”
One might think a GSE, linked to the federal government and beholden in a big way to taxpayers, would be a responsible corporate citizen. But that apparently is not the case in some dealings between local governments and Fannie/Freddie.
Most people and companies involved in real estate transfers pay taxes to cover the cost of recording the transactions. In West Virginia, transfer taxes are paid to the counties.
But Fannie Mae and Freddie Mac refuse to pay. They are federal government agencies and, as such, exempt from local and state taxes, officials of the two companies insist.
Actually, neither company is a federal agency. Both remain corporations operating under federal conservatorship.
A few county commissions in West Virginia, including those in Hancock and Marshall counties, have joined a lawsuit against Fannie Mae and Freddie Mac. The suit maintains the two should be compelled by a federal court to pay real estate transfer taxes.
Though amounts being lost because the companies refuse to pay have not been specified, they are substantial enough that some counties believe court action is warranted.
As we have reported, a similar lawsuit was filed in Michigan. There, a federal judge ruled Fannie Mae and Freddie Mac must pay $13.5 million in damages to resolve a dispute over real estate transfer taxes. The judge said the two companies might be exempt from direct local taxes, but not indirect ones such as those involved in the transfer fees.
Hancock and Marshall counties already have agreed to join the lawsuit in West Virginia. Officials in Brooke, Ohio, Tyler and Wetzel counties should consider doing so – if that would be in the counties’ best interests. Fannie Mae and Freddie Mac have bled taxpayers abundantly enough without granting them exemptions to fees other companies and individuals must pay.