Summit County filed a lawsuit Tuesday against Freddie Mac, claiming the government-sponsored company failed to pay fees and transfer taxes on more than 3,500 real estate transactions over a six-year period.
The Virginia-based mortgage buyer, also known as the Federal Home Loan Mortgage Corp., committed fraud by claiming it was a government entity and exempt from making those payments, the suit says.
“The reality is Freddie Mac is a federally chartered, private corporation and they should have been paying these fees and taxes,” Assistant Prosecutor Joe Fantozzi said.
The suit covers 2002 through 2008, when the Ohio Department of Taxation ruled that Freddie Mac and Fannie Mae, also known as the Federal National Mortgage Association, weren’t exempt. The companies began paying in 2009, officials said.
The county is still trying to determine the amount of money involved, Fantozzi said, but it’s more than $25,000. Transfer taxes are based on the sale price of the property and they amount to a $4 fee per $1,000.
The county also charges a 50-cent lot fee and recording fees, which are $28 for the first two pages and $8 for each page after that.
Summit is seeking repayment of all unpaid fees and taxes, plus interest and penalties.
The county’s 57-page suit was filed in Common Pleas Court and assigned to Judge Eleanor Marsh Stormer. It mirrors a lawsuit Oakland County in Michigan filed last year in federal court, Fantozzi said.
Oakland County won its case in March against both Freddie Mac and Fannie Mae.
Last month, Hernando County, Fla., and DeKalb County, Ill., filed suits against both companies.
Summit is believed to be the first county to file legal action in Ohio, Fantozzi said. A lawsuit wasn’t filed against Fannie Mae because it didn’t handle many mortgages here, he said.
A representative for Freddie Mac could not be reached for comment.
Meanwhile, the Federal Housing Finance Agency, which oversees both companies and Federal Home Loan Banks, has filed a federal lawsuit in Chicago against Illinois and some counties to validate Fannie Mae’s and Freddie Mac’s tax-exempt status, the Chicago Tribune reported last week.
The Federal Housing Finance Agency issued a statement to the newspaper saying: “FHFA must resist when local governments impose unlawful tax-raising programs on Fannie Mae and Freddie Mac that, in turn, create a cost for taxpayers across the country.”
Fantozzi said the county had no conversation with Freddie Mac about the issue before filing the suit.
“We figured that at this point our claim is that they’ve been committing fraud, and we wanted to get the lawsuit filed and get it going,” he said.
Rick Armon can be reached at 330-996-3569 or email@example.com.