Judge dismisses Milwaukee County suit against Fannie, Freddie

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A federal judge dismissed Milwaukee County’s lawsuit to recoup an estimated $1 million it claimed to be owed by Fannie Mae and Freddie Mac in unpaid real estate transfer taxes.

But the county could appeal that decision.

The county sued Fannie Mae, formally the Federal National Mortgage Association, and Freddie Mac, formally the Federal Home Loan Mortgage Corp., in July 2012. John La Fave, the county’s register of deeds, said then the entities illegally claimed an exemption from paying the taxes, which are assessed when a property is sold.

La Fave did not immediately respond to a request for comment Thursday.

Milwaukee County’s transfer taxes are assessed at $3 for every $1,000 a property is worth, and La Fave said in 2012 he estimated the county was owed at least $1 million. Of that estimated $1 million, the county could have kept $200,000, and the rest would have been sent to the state.

The county was seeking permission to file a class-action lawsuit on behalf of all Wisconsin counties.

However, United States District Judge Charles Clevert dismissed the lawsuit Wednesday. He ruled Fannie Mae’s and Freddie Mac’s charters exempted them from all taxation and rejected Milwaukee County’s argument that the exemption covered only direct taxes.

Clevert cited in his order to dismiss a host of similar lawsuits filed throughout the nation that were decided in favor of Fannie Mae and Freddie Mac. He also cited a lawsuit filed in Michigan that served as Milwaukee County’s model. That case was decided against Fannie Mae and Freddie Mac, but the Sixth Circuit Court of Appeals overturned the ruling while the entities’ motion to dismiss the Wisconsin lawsuit was pending.

Mark Grady, interim corporation counsel for the county, told the Milwaukee County Board of Supervisors’ Judiciary, Safety and General Services Committee on Thursday that the county could appeal the decision. The full board would have to vote on whether to proceed with that appeal, he said. The next full board meeting is scheduled for July 25.