FEDERAL HOUSING FINANCE AGENCY
Statement by Federal Housing Finance Agency on FHFA
Lawsuit Against Illinois Tax Officials
For Immediate Release
Contact: Corinne Russell (202) 649-3032
Stefanie Johnson (202) 649-3030
June 22, 2012
“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.
“Longstanding federal statutes and Supreme Court rulings preclude states, counties and
municipalities from imposing real estate transfer taxes on Fannie Mae and Freddie Mac, yet,
several counties in Illinois are requiring or threatening to require them to pay such taxes.
Federal law does provide for Fannie Mae and Freddie Mac to pay real estate taxes on the value
of properties they hold, but does not sanction taxes tied to the transfer of properties.
“As conservator of Fannie Mae and Freddie Mac, FHFA must protect taxpayers from local
taxation that clearly runs counter to long-established federal law. This lawsuit asserts that
Fannie Mae and Freddie Mac are exempt from the Illinois transfer taxes and asks the court to
block this improper taxation.”
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
WESTERN DIVISION
THE FEDERAL NATIONAL MORTGAGE
ASSOCIATION (“FANNIE MAE”); THE
FEDERAL HOME LOAN MORTGAGE
CORPORATION (“FREDDIE MAC”); and,
THE FEDERAL HOUSING FINANCE
AGENCY, in its capacity as an agency of the
federal government and in its capacity as
Conservator of Fannie Mae and Freddie Mac,
Plaintiffs,
v.
BRIAN HAMER, in his official capacity as
Director of the Illinois Department of Revenue;
JOHN J. ACARDO, in his official capacity as
DeKalb County Clerk and Recorder; KAREN
A. STUKEL, in her official capacity as Will
County Recorder; NANCY MCPHERSON, in
her official capacity as Winnebago County
Recorder; DAWN YOUNG, in her official
capacity as Whiteside County Recorder;
DEBBIE GILLETTE, in her official capacity as
Kendall County Recorder; SANDY WEGMAN,
in her official capacity as Kane County
Recorder,
Defendants.
[ipaper docId=98061953 access_key=key-2o12pqvwyasiavmmyd2t height=600 width=600 /]
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This is unbelievable. How do they argue on one side they don’t have to work with taxpayers that bailed them out when they need a modification and then say on the other hand they don’t have to pay transfer taxes.
Does anyone know if the Qui Tam lawsuits in Nevada and California I believe on non-payment of transfer taxes were dismissed.
I have been reading – and, although I can’t say I understand everything, something does not seem right in the mortgage industry. This is what I gather, from what happened at our refinance (took me this long to understsnd what probably happened back in 2005 during our closing):
Wholesale broker correspondent (“originator/lender” named on Note/mortgage), uses credit line from National Bank to make loans to consumers; real originator is a National Bank (Corporate veil to absolve Bank of broker correspondent’s predatory lending – Bank knows, but broker agrees to take fall if discovered, will promptly do further business w/Bank under new dba. Bank, Fannie Mae, and Title Company are owners of MERSCORP (parent of MERS), each use at least 2 hats and are hidden contractual parties to consumer borrower’s mortgage loan transaction (MERS named as “nominee” to wholesale lender, actually is Principal of named lender). .
Source of funds (real lender) is a conduit (i.e., Fannie Mae’s “first hat” = a lender/corporation). The real “borrower” is the Bank (puts on “servicer hat” to collect certificate payments dubbed as mortgage loan payments). Title company “first hat” = agent of both Fannie Mae, and Bank, at loan settlement (transactions/ real parties intentionally concealed from consumer borrower at closing table). Title company conspires (“second hat”), processes documents as agent for the broker named as lender on mortgage/note, delivers consumer borrower’s executed Note to Bank, who then replenish correspondent broker’s credit line by depositing Note, and selling pools of mortgage liens to Fannie. Using “first hat”, Fannie Mae buys the collateral (pools of mortgages loan liens) from Bank, and corporately issues REMIC/MBST as Trustee, to raise funds. Fannie’s “second hat” = government lending funds are created by investor’s purchases of the certificates which are backed by the mortgage liens. Fannie apparently uses “second hat” status to avoid taxation on the REMIC/MBST).
REMIC certificate payments guaranteed to investors by corporate Fannie; Fannie retains the real originating Bank as servicer of the REMIC (collects “mortgage payments” from consumer borrowers and distributes them to certificate holders). Since the real parties are concealed from borrower at closing, borrowers are prevented from negotiating and are subject to delays which prevent them from being able to successfully sue for imprudent lending (the “named lender” never had beneficial interest, and usually has changed its dba by foreclosure time).
If a borrower has claims/defenses, title insurance kicks in to protect Bank, and Fannie Mae retains an attorney firm (foreclosure mill who files foreclosure in the name of the servicing Bank) to represent its Trustee interest (corporate) in the REMIC collateral (people’s homes). But, unbeknownst to the Courts, and the consumer, the attorney is concealing the real party Trustee (corporate Fannie Mae), and DOES NOT really represent the foreclosing servicer Bank. The Bank has no real interest in the Note (repaid/long gone and deposited), nor interest in the collateral (which belongs to a corporate TRUST). If the Bank’s standing is challenged, the Bank brings in another attorney – and the first attorney becomes subtitute trustee for the REMIC Trust (agent of Fannie).
Fannie at all times wants to avoid foreclosing in its own name, because as a corporation it can be taxed, no? But as an “innocent government lender, who supposedly took interest in the home in connection of a loan it purchased from a “bad originator”, it supposedly is exempt. This is why Fannie is hidden as a mortgagee – and why MERS is needed. To avoid taxation further, when a Bank successfully forecloses it does not take possession of the real estate (unless it is required to corporately repurchase a misrepresented loan). Instead, after a successful foreclosure, the Bank “assigns” title back to MERS (who, as mentioned above, is actually Fannie Mae, and “bids” the highest amount), and once again a broker/title company/bank mortgages the home to a new buyer, and the process is repeated.
Fannie seems to be attempting to shirk taxation by claiming government agency status – but, what if one can show that Fannie Mae is not acting as a government agent when it confiscates real property based upon a (non-existent) beneficial interest in an unpaid Note? What if Fannie is really acting on behalf of MERS, an unregulated private corporation (this is how Fannie got an interest in (solely) the property in the first place, no?.
A mortgage without a Note is unenforceable, isn’t that true? A mortgagee without an interest in an unpaid Note cannot foreclose a mortgage and consfiscate real property, can it? How is Fannie able to obtain these tax-free properties in Illinois without presenting the original Note?