The Federal Housing Finance Agency filed a lawsuit against the state of Illinois and several counties to shield Fannie Mae and Freddie Mac from real estate transfer taxes.
The Illinois Department of Revenue and six clerk of courts in counties around the state will impose the taxes on real estate transferred to and from the government-sponsored enterprises. These include charges for foreclosed properties the GSEs both repossess and resell.
But Fannie and Freddie should be exempt from the taxes because of their conservatorship agreements entered into in 2008, the FHFA claimed in the suit filed in the U.S. District Court for the Northern District of Illinois.
The agency said Fannie and Freddie are entitled to a judgment declaring the firm not liable for the taxes as counties around the country seek to file similar claims.
“The Federal Housing Finance Agency recognizes the difficulties faced by local officials that are struggling with shrinking tax bases. However, 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,” the agency said in a statement Friday.
Both Fannie and Freddie pulled more than $188 billion in bailouts from the Treasury Department since entering conservatorship.
The agency also claimed federal statutes and Supreme Court rulings preclude states and local governments from charging real estate transfer taxes on the GSEs.