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Montgomery Co. files suit against Fannie Mae, Freddie Mac

Montgomery County on Monday filed a federal class action lawsuit against Fannie Mae and Freddie Mac, alleging the mortgage finance firms wrongly avoided paying transfer taxes in Maryland.

In some instances, the companies have said they are exempt from the taxes (required to record documents, including deeds, at land records offices throughout the state) "because they are governmental entities or agencies," according to the county's complaint.

But that's not true, claims the county.

"Fannie and Freddie are no longer governmental entities or federal instrumentalities," the county's complaint reads. Both are publicly traded companies, although since 2008 they have been under the control of the Federal Housing Finance Agency, which the county also named as a defendant in the case.

Montgomery County, one of many jurisdictions across the country to file such a case, does not specify in its complaint how much money it has lost because of the firms' failure to pay the transfer taxes.

There are 18 counties in Maryland, Montgomery says, that are in this situation and deserve compensation. Six jurisdictions in the state do not collect a transfer taxes, according to Montgomery’s attorneys.

There is a link to a PDF of the complaint to the left of this post.

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