A judge has ruled in favor of Fannie Mae, Freddie Mac and their regulator in a federal lawsuit alleging that the secondary lenders skirted real estate transfer taxes.
The putative class action was originally filed by Randolph County, Ala., in U.S. District Court for the Middle District of Alabama.
The plaintiff argued that Fannie and Freddie are liable to it and other Alabama counties for failure to pay the state tax on real estate transfers.
U.S. District Judge Keith Watkins noted in his decision that federal law exempts the two secondary lenders from all taxation except property taxes.
The county argued that the Supreme Court altered the meaning of “all taxation” in that it covers only direct taxes, not excise taxes like the county is attempting to collect.
But the judge disagreed, citing cases filed by more than a dozen other local government plaintiffs where “virtually every other court to encounter these cases has reached the same conclusion — that defendants are exempt from state and local excise taxes on the transfer and recording of real property.”
The plaintiff’s motion for partial summary judgment was denied, while the defendants’ motion for summary judgment was granted.
