Plaxen Adler Muncy Brings Lawsuit against Fannie Mae and Freddie Mac for Failure to Pay Transfer Taxes to Maryland Counties
Bruce Plaxen and Plaxen Adler Muncy, P.A. has filed a lawsuit on behalf of Montgomery County, Maryland against mortgage giants Fannie Mae and Freddie Mac for failing to pay transfer taxes to Montgomery County. The suit was brought as a potential class action that other Maryland counties may join if they are eligible. There are similar lawsuits against Fannie Mae and Freddie Mac pending in 20 states for their failure to pay the transfer tax. Plaxen Adler Muncy is part of a legal team that includes Don Springmeyer of Wolf, Rifkin, Shapiro, Schulman & Rabkin LLP, Andrew Bederman of Greenberg and Bederman, and Montgomery County Attorney Marc P. Hansen.
Whenever real property is transferred in a county with a transfer tax, the party conveying the property must pay the tax to the county. For example, in Montgomery County the transfer tax on a residential home sold for more than $70,000 is one percent of the sale price. Other tax rates apply based on the sale price and zoning classification of the property. Eighteen counties in Maryland have a transfer tax, and therefore are eligible to join the lawsuit brought by Plaxen Adler Muncy, P.A. The amount of unpaid taxes is significant, as Fannie Mae and Freddie Mac own or guarantee $5.2 trillion in mortgages and back more than two thirds of mortgages currently being originated.
Fannie Mae and Freddie Mac have not paid the taxes because they claim to be exempt from them. The primary exemption they claim is that government agencies are not required to pay state transfer taxes. While Fannie Mae and Freddie Mac began as government agencies, they have not been government agencies since 2003. They are now publicly traded corporations and therefore Plaxen Adler Muncy contends they are liable for the tax. Plaxen Adler Muncy and their co-counsel are arguing that Fannie Mae and Freddie Mac must pay the transfer tax like any other non-government entity would be required to.
There are approximately 50 similar cases against the two mortgages companies pending in 20 states across the United States. Given the numerous cases in different jurisdictions, it is likely that the issue of whether or not the transfer tax applies to these companies will eventually make its way to the United States Supreme Court, as it is unlikely that all of the jurisdictions where the cases are pending will reach a consensus.
Plaxen Adler Muncy is proud to be part of the legal team fighting for Maryland citizens and counties. See the many other ways Plaxen Adler Muncy protects Maryland’s citizens here.