Winnebago County Sues Mortgage Giants Fannie Mae and Freddie Mac for Unpaid Taxes

By: Meghan Dwyer Email
By: Meghan Dwyer Email

Winnebago County Recorder Nancy McPherson says Fannie Mae and Freddie Mac owe Winnebago County $26,000 in unpaid real estate transfer taxes.

The county joined in a class action lawsuit filed June 21, 2012 in federal court in Rockford seeking to compel Fannie and Freddie to pay local counties overdue taxes.

Real estate transfer taxes in Illinois are supposed to be paid when a property transfer is recorded. For every $500 a property is worth, a tax of 50 cents must be paid. In Winnebago County, since 2006, Freddie and Fannie have not paid these taxes on many foreclosed properties they have purchased.

The mortgage giants claim they don't have to pay the tax because they are exempt as a governmental entity. On Friday, the Federal Housing Finance Authority filed a federal lawsuit on Fannie and Freddie's behalf in Chicago, asking a court to rule on whether they are exempt.

The class action lawsuit filed Jun 21 alleges Fannie and Freddie failed to pay the transfer tax to Kane, Whiteside, Will, Winnebago, Dekalb, and Kendall counties. The class action represents all 102 Illinois counties, if they eventually choose to join in the litigation.

Nancy McPherson says $26,000 is not "chump change," and the county wants its money. She says the county sent Fannie and Freddie a letter in early spring trying to resolve the matter, but the companies didn't respond.

A group of county recorders noticed the taxes weren't being paid after an informal meeting back in December 2011. Lawyers for Dekalb County have taken the lead in the litigation.


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