In a lawsuit alleging that several banks violated Michigan’s County Real Estate Transfer Tax Act by improperly claiming exemptions involving the sale of foreclosed properties, Judge Bell allowed Fannie Mae, Freddie Mac and the Federal Housing Finance Agency to intervene as defendants and thus side with the banks.
The only reason given by the intervenors for their motivation to intervene is that a judgment against the defendants could have “negative implications for future transfers involving these federal entities.”
Interestingly, the motion to intervene foreshadowed a very important issue with potentially enormous financial implications that will be decided in this lawsuit: whether three federal statutory tax exemptions that unambiguously apply to Fannie Mae, Freddie Mac and the FHFA, also apply to banks involved in the sale of foreclosed-upon homes with those federal entities.
Even though Judge Bell, in a different case, found that the intervenors could not be held directly liable for the transfer taxes because of the statutory exemptions, Judge Bell still found that the intervenors had a substantial legal interest in the Court’s construction of the exemptions. Namely, the other case did not decide whether the exemption covers the entire process of real estate transactions and thus non-federal entities.
Related Post: Taking sides: Fannie Mae and Freddie Mac side with banks, citing possible “negative implications”