Minn. Counties: 'Fannie, Freddie Stiffed Us, Too!' Another County Hops On Municipal Bandwagon Of Local Gov'ts Accusing Outfits Of Recording Fee Dodge

In Hennepin County, Minnesota, the Pioneer Press reports:

• The Hennepin County attorney's office has filed a federal lawsuit against mortgage giants Fannie Mae and Freddie Mac, claiming the companies illegally failed to pay required taxes on home sales.
  
  The class-action suit, filed on behalf of all 87 Minnesota counties, is the latest in a string of similar lawsuits filed by other states against federal government-sponsored Fannie Mae and Freddie Mac in recent weeks.
  
  Hennepin County Attorney Michael Freeman said at a news conference Friday, Aug. 24, that there are "tens of thousands" of transactions in question, going back six years, and that the lost tax dollars number in the millions.
  
  "This is solely a question of law," Freeman said after the conference, regarding the companies' claim of tax exemption. "The question is: 'Are Fannie and Freddie exempt from this law?' We know Fannie and Freddie sold houses and we know they didn't pay the tax."
  
  Specifically, the lawsuit points to Minnesota's deed transfer tax, a tax of 0.33 percent collected on any property sale of more than $500. About 97 percent of the tax funds go to the state and the rest to counties. Hennepin and Ramsey counties were granted, via special legislation, the right to collect an additional sliver of tax dollars for environmental clean-up funds.
  
  Freeman estimated that Fannie Mae and Freddie Mac own or guarantee about 40 percent of home mortgages in Hennepin County, a number that has ballooned since the foreclosure crisis began in 2005.

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• But Hennepin County contends that "all taxation" does not include excise taxes, which are not direct taxes on real property. Minnesota's deed transfer tax is an excise tax.
  
  Freeman said at least eight similar lawsuits have been filed in other states over the last two weeks. He said a recent court decision in Michigan set a precedent for these cases.
  
  The Michigan lawsuit, filed last year by Oakland County, hinged on the same tax exemption argument. A U.S. District judge ruled in favor of Michigan counties in March, saying the mortgage companies were not exempt and therefore required to repay the money. Fannie Mae and Freddie Mac have indicated they plan to appeal.

For more, see Minnesota: Counties sue Fannie Mae, Freddie Mac.