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Michigan Counties Sue Fannie and Freddie over Property Taxes

Michigan's Oakland and Ingram Counties have filed lawsuits against ""Fannie Mae"":http://www.fanniemae.com and ""Freddie Mac"":http://www.freddiemac.com, alleging the GSEs avoided paying the state property-transfer tax on thousands of REO homes by claiming false exemptions.

""Oakland County says"":http://www.oakgov.com/about/news/2011/pr_11_98.html there are hundreds, perhaps thousands, of deeds recorded by Fannie and Freddie where they claimed exemptions. Oakland County maintains the exemptions cost the county at least $250,000 per year.

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Over the past six years, Oakland County could recover as much as $1.5 million and the state of Michigan as much as $10.5 million.

According to the ""_Detroit Free Press_"":http://www.freep.com/article/20110624/NEWS06/106240420/Oakland-Ingham-counties-sue-Fannie-Mae-Freddie-Mac-dodging-taxes, in addition to the GSEs, the Ingham suit also named several banks and servicers it said sold mortgages to Freddie and Fannie right before they were sold to buyers to avoid the state transfer tax.

""It's time for those who caused the foreclosure crisis and the enormous drops in Oakland County property values to pay their fair share,"" said Andy Meisner, Oakland County treasurer. ""Oakland County taxpayers shouldn't pay the tab to clean up Fannie and Freddie's mess.""

Both Fannie and Freddie claim they are exempt from the Michigan real estate transfer tax because they are a government entity or are exempt under federal law.

""Fannie Mae and Freddie Mac are corporations with shareholders and are publically traded,"" said Judith Cunningham, Oakland County corporation counsel. ""In fact, Freddie Mac's Web site informs potential investors that it is not a ‘government agency.' Therefore, the state law exemption doesn't apply.""

About Author: Heather Cernoch

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