Fannie Mae and Freddie Mac supposedly owe Florida taxpayers some money, and authorities say it's time to collect.
Officials in Hernando County, Fla., filed a class-action lawsuit against the mortgage giants on behalf of the state’s other 66 counties challenging Fannie and Freddie’s claims that they don’t have to pay the state’s real estate transfer tax, Hernando Today reports. The tax is levied whenever a company assumes ownership of a home through a foreclosure or other avenue, but Fannie and Freddie claim they’re exempt from the tax because they’re government entities and not private companies.
In 2008, the government assumed some control over the mortgage giants in an arrangement known as a conservatorship in an aim to stabilize the housing market. Since, the government has dumped more than $100 billion in taxpayer money into the agencies. The mortgage giants own or guarantee millions of the country’s home loans.
The Florida suit claims that though the Fannie and Freddie are federally backed, they’re actually private companies and therefore have to pay the tax.
If past lawsuits are any indication, Florida may have a case. Eighty-two Michigan counties won a similar suit last month after a judge ruled that the mortgage giants aren’t exempt from the state’s property transfer tax, the Detroit Free Press reports. As a result, the state may net up to $100 million from Fannie and Freddie.
The tax lawsuits are just the latest in a slew of criticisms hitting the mortgage giants. The Securities and Exchange Commission sued former Fannie and Freddie executives last year, alleging they didn’t adequately warn investors about the companies’ exposure to subprime loans in the lead up to the financial crisis. In addition, a recent watchdog report found that the mortgage giants were failing to keep tabs on the contractors hired to maintain their foreclosed properties.
But the agencies’ decision not to perform principal reductions -- a type of loan forgiveness -- has perhaps prompted the most criticism.