Oakland County v. Federal Housing Finance Agency
871 F. Supp. 2d 662
E.D. Mich.2012Background
- This case involves cross-motions for summary judgment over whether FHFA, Fannie Mae, and Freddie Mac are liable for Michigan real estate transfer taxes on conveyed foreclosed properties.
- Enterprises are exempt from certain taxes under federal charters and HERA, but transfer taxes are excise taxes, not real property taxes.
- Transfer taxes are imposed on the recording of deeds and the transfer of property, not on the property itself.
- FHFA acts as Conservator with expansive rights to the Enterprises’ assets and operations, and may not be liable for certain fines or taxes.
- Plaintiffs argue the federal exemptions cover only direct taxes (not excise taxes); Defendants argue exemptions apply to all taxation, including transfer taxes.
- Court ultimately Grant summary judgment for Plaintiffs and State Plaintiffs, Deny Defendants’ motion; damages to be determined.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal exemptions from all taxation cover transfer taxes | Wells Fargo controls; exemptions cover only direct taxes | Exemptions from all taxation apply to transfer taxes as well | Exemptions do not cover transfer taxes |
| Nature of transfer taxes as excise vs direct taxes | Transfer taxes are excise taxes not direct taxes | Exemptions apply to all taxation including transfer taxes | Transfer taxes are excise taxes not subject to exemption under 'all taxation' |
| Authority of Wells Fargo v. United States in interpreting 'all taxation' | Wells Fargo unambiguously limits to direct taxation | Wells Fargo controlling; exemptions broad | Wells Fargo governs; exemptions do not include transfer taxes |
| Michigan state tax exemption analysis | Federal exemptions control due to Supremacy Clause | Michigan exemption may apply if applicable | Michigan exemption not applicable to Enterprises |
Key Cases Cited
- Wells Fargo Bank v. United States, 485 U.S. 351 (U.S. 1988) (exemption from all taxation covers only direct taxes, not excise taxes)
- Laurens Fed. Sav. & Loan Ass’n v. South Carolina Tax Comm’n, 365 U.S. 517 (U.S. 1961) (stamp taxes on advances not permissible under exemption from all taxation)
- Pittman v. Home Owners’ Loan Corp., 308 U.S. 21 (U.S. 1939) (stamp tax on mortgages impermissible as tax on loans)
- Murdock v. Ward, 178 U.S. 139 (U.S. 1900) (excise tax distinction; transfer rights vs property tax)
- Greiner v. Lewellyn, 258 U.S. 384 (U.S. 1922) (excise vs direct tax; bonds taxation)
- Fed. Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95 (U.S. 1941) (federal instrumentality exempt from state sales tax)