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Hernando County clerk files suit against Fannie Mae, Freddie Mac

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Published:   |   Updated: May 7, 2013 at 04:20 PM
BROOKSVILLE -

Hernando County Circuit Court Clerk Karen Nicolai has filed suit in U.S. District Court against the nation's two largest federally backed mortgage companies.

The suit is against the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association, commonly called Freddie Mac and Fannie Mae.

The class action suit, filed on behalf of Hernando and the other 66 Florida counties, is over the mortgage company giants' claims they are exempt from paying the state real estate transfer tax.

In Hernando County, that amounts to at least $75,000, although depending on the judge's final outcome the damages could be significantly higher.

"It's not a big money thing for us," said incoming Circuit Court Clerk Don Barbee. "It's more the principle of the thing."

Barbee said when the mortgage companies assume ownership of a home, due to a foreclosure or other reason, the county is owed the transfer tax.

In Florida, the transfer tax is levied at the rate of $.70 per $100 (or $7 per $1,000) in the value of the transfer of real property.

On a $100,000 home, the excise tax would be $700.

George Angeliadis, an attorney with the Hogan Law Firm, said each county in Florida has the option of joining the class action suit.

"The investigation is ongoing as to how far-reaching this is, and we hope that we'll be able to serve as the class representative for all the counties in the state," Angeliadis said.

Angeliadis said the clerk's office will try to recoup damages back to 2005.

Freddie Mac and Fannie Mae contend they are not required to pay out the tax because they are government agencies and, under Florida law, government entities are exempt.

But in the suit, Nicolai contends that both agencies are federally chartered private corporations and not government entities, and therefore not exempt.

"The claim by defendants Fannie Mae and Freddie Mac that they are exempt from the transfer tax was negligent, intentional, wanton and-or intended to defraud," the suit said.

Adding weight to Nicolai's suit was a ruling in March by a federal judge in Michigan that the publically traded companies are not exempt from paying the tax at the time of a property sale.

The suit is big in Florida because Freddie Mac and Fannie Mae took over ownership of so many foreclosed homes. But when the homes sold, neither agency paid the transfer tax, Barbee said.


mbates@hernandotoday.com (352) 544-5290

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