Michigan Counties Win Big in Fannie, Freddie Lawsuit

Governing reports:

Score one for the little guy. Or maybe make that $5 million for the little guy.

A Michigan county has won a lawsuit against Fannie Mae and Freddie Mac in what might be the first – but probably won’t be the last – suit of its kind.

Oakland County, Mich., at one time one of the country’s wealthiest counties, was hit hard by the recession and lost $14 billion in taxable property values since 2007, according to Treasurer Andy Meisner. But what really put salt on the wound was when Fannie Mae and Freddie Mae failed to pay transaction taxes it owed each time it foreclosed on a property and sold it off to a new owner. Those taxes -- about $1,500 for the state and $220 for the county on a $200,000 home – grew in the wake of the housing crunch. Meisner estimates that Fannie and Freddie owe $3 million to $5 million to the county, plus another $15 million to $20 million to the state, in unpaid transaction taxes from 2005 to 2011.

This is why Fannie and Freddie should have gone through federal bankruptcy court.