Oakland County officials hope their lawsuit against Fannie Mae and Freddie Mac goes to the U.S. Supreme Court.
The Oakland and Genessee County treasurers are both suing Fannie and Freddie because they didn’t pay millions in so-called “transfer taxes” on a number of real estate deals.
The mortgage giants have claimed that under federal law, they’re exempt from those state and local taxes because they’re government agencies.
But Oakland County Executive L. Brooks Patterson says they’re not exempt from this kind of tax—and they also stretch the definition of a “government agency.”
“It’s important to us, because there’s millions of dollars involved, that Fannie Mae and Freddie Mac somehow just said, ‘We’re not liable to pay…we’re a government agency,’” Patterson says. “And yet you go to their websites, and they call themselves a private corporation.”
Both Fannie Mae and Freddie Mac are government-backed, but are publicly-traded companies with private shareholders.
U.S. District Judge Victoria Roberts initially ruled in the counties’ favor last year, noting there is precedent for government agencies being required to pay “excise taxes” on specific items.
But the 6th Circuit Court of Appeals overturned Roberts’ decision recently, affirming that Congress expressly exempted the defendants from “all [state and local] taxation.” That left the plaintiffs with nowhere to go but the U.S. Supreme Court.
Oakland County officials claim that Fannie and Freddie owe them $1.5 million, and owe the state of Michigan more than $10 million.
“There’s millions of dollars involved for Oakland,” Patterson says. “You multiply that by 3000, and you can see it’s a significant case for counties across America.”
