Oakland County officials are cheering a ruling by a federal judge that will allow the county to recoup at least $1.5 million following what the county and, ultimately the court, determined was the shirking of tax liabilities by mortgage behemoths Fannie Mae and Freddie Mac.
U.S. District Court Judge Victoria A. Roberts’ decision on Friday, March 23 sets the stage for the county to get back millions of dollars in unpaid real estate transfer taxes — which is levied for the state at $7.50 per $1,000 in value on the property sold, and $1.10 for the county per $1,000 in value on the property sold — that Fannie and Freddie didn’t pay between 2006 and 2011.
“Some suggested that Oakland County suing mortgage giants Fannie Mae and Freddie Mac was a David vs. Goliath match up, and that we had no chance at recovering millions of dollars for Oakland County taxpayers,” said Oakland County Treasurer Andy Meisner in a press release. “Today, we have proven them wrong, achieving a major victory and taking one step toward helping our county recover the property values we’ve lost as a result of the foreclosure crisis.”
Oakland County Executive L. Brooks Patterson also applauded the decision.
“Judge Roberts’ decision is a victory for Oakland County taxpayers,” he stated in a press release. “We contended from the beginning that Fannie Mae and Freddie Mac are private corporations, not government entities. Judge Roberts affirmed that today.”
Roberts granted the county’s motion for summary judgment in her 16-page ruling last week, but that doesn’t mean that the legal wrangling is over. Meisner, who spearheaded the lawsuit that was announced last summer, said earlier this week that he “wouldn’t be surprised” if the defendants appeal the ruling. However, Roberts’ decision serves as a good indication that the mortgage giants may not have good legal ground, Meisner said.
“The fact that we won on a motion for summary judgment suggests that our case is very strong,” he said.
While Meisner said officials are still “drilling down” on how much money the state and county are expected to receive as a result of the ruling (Patterson’s release said the county stands to gain as much as $1.5 million), he said the “most accurate” estimate is between $3 million and $5 million for the county and $15 million and $20 million for the state.
Meisner has all along said he is requesting that the state earmark the money it receives as a result of the lawsuit because, as Meisner says, the state would not come into the funds without the efforts of Oakland County. He said he has made that request to state Treasurer Andy Dillon and expects further discussions on that request in the near future.
Data expected on Friday, March 30 will allow officials to better grasp exactly how much the county and state are expected to net.
“We originally had done a $1.7 million estimate (for the county), but that was based on an estimated average transaction of $100,000, but the actual average was about $220,000,” he said.
Fannie and Freddie, which received billions of dollars in federal support during the mortgage meltdown four years ago, claimed an exemption from the transfer tax because, they say, as government agencies they don’t have to pay the tax that is added whenever a property changes hands. Meisner and the county’s lawyers disagreed.
This isn’t the only effort the county expects to embark on to recover money from agencies and businesses that some say helped propel the county toward economic calamity in the run-up to the 2008 general election.
Meisner said he met with county attorneys to discuss what he called the “next steps” in his efforts.
“We do have other actions,” Meisner said, though he declined to elaborate on what those are or when they will be made public.