Five Register of Deeds offices in North Carolina have written Attorney General Roy Cooper asking for a revised opinion on the tax exemption currently given to the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Association (Freddie Mac). Guilford, Davidson, Caldwell, Duplin, and Davie Counties signed on to the letter dated June 28.

Press release after the jump.

MEDIA RELEASE

For Immediate Release

July 17, 2012

Contacts:

David Rickard, Davidson County Register of Deeds

(336) 242-2150
David.Rickard@DavidsonCountyNC.gov

Jeff Thigpen, Guilford County Register of Deeds 

(336) 451-5300
jthigpe@co.guilford.nc.us

Registers of Deeds in Five NC Counties Take Issue with Fannie and Freddie's Tax Exempt Status

Five Register of Deeds offices in North Carolina have written Attorney General Roy Cooper asking for a revised opinion on the tax exemption currently given to the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Association (Freddie Mac).  Guilford, Davidson, Caldwell, Duplin, and Davie Counties signed on to the letter dated June 28th.

The Register of Deeds have asked for a review of a 1972 opinion from the Attorney General's office that allowed Fannie and Freddie to claim exemption from excises taxes on land transactions as quasi judicial entities.   This request comes after a US District Court in Michigan issued a decision in March that Fannie and Freddie were not exempted from paying excise taxes.    Fannie and Freddie has been the subject of congressional investigations based on its role in the housing and financial crisis of 2008.

The letter sent to the Attorney General raises that central question under NC law:

                Should Fannie Mae and Freddie Mac be considered private corporations or government entities entitled to an excise tax stamp exemption under N.C.G.S. 161-14 (b)?

"A lot has changed in the past 40 years and our letter seeks clarity and certainty on their status", says Davidson County Register of Deeds David Rickard, a lead signor. "If Fannie and Freddie are traded on the New York stock exchange, why should taxpayers have to foot the bill for a tax exemption that no longer applies to them?"

The letter also states:

The revenue from the excise tax collected by Registers of Deeds is used by North Carolina counties to fund schools, police and fire fighters, and human services.   These services are under increasing stress based on decreased property values based on our most recent financial crisis felt by families across our state.    

Register of Deeds Jeff Thigpen, a co-signor, estimates a loss of potentially $65,000 in tax revenue for state and local governments based on land related transactions involving Fannie Mae alone during a six month period from October 2010 to June 2011.   "State and local governments should not be giving financial aid to corporations responsible for our financial crisis when we are facing layoffs for those who teach our kids and keep us safe. At the least, we'd like clarification on the law.   Policymakers could also begin taking corrective action to restore fiscal balance".   

In North Carolina, Registers of Deeds collect excise taxes during land transactions when deeds are presented for registration in county offices. The tax is levied on the transactions in real estate for all persons and organizations except federal, state, county, and municipal governments based on North Carolina General Statutes. The current state excise tax rate is $1 on each $500 of consideration of value in interest or property conveyed. The revenue from the excise tax goes to both state and county governments across North Carolina.

"This request is being made by both Democrat and Republican Registers of Deeds in urban and rural counties.  We don't view this concern as a partisan issue," says Wayne Rash, Caldwell County Register of Deeds and current President of North Carolina Association of Register of Deed (NCARD). "Its most importantly about the law and tax fairness to the citizens we serve.   We look forward to addressing it as quickly as possible".

                                 ###

Additional Signor Contacts:

Wayne Rash, Caldwell County Register of Deeds

(828) 381-2612

Davis Brinson, Duplin County Register of Deeds

(910)296-2108

Brent Shoaf, Davie County Register of Deeds

(336) 753-6080

 Attachments:   

5 NC County Register of Deeds Letter to Attorney General 

1972 NC Attorney General's Opinion

Oakland County et al v. Federal National Mortgage Association et al.  (Recent US District Court Ruling)

PDF of Press Release

Comments

[David Wharton]

State and local governments should not be giving financial aid to corporations responsible for our financial crisis ...

There was a lot discussion here, some months ago, on the topic of Fannie and Freddie's responsibility for the financial crash. I still think Fannie and Freddie played an important role in the financial crisis; do the dissenters want to weigh in on whether Jeff's off base?

[Ed Cone]

I haven't seen much disagreement here with the proposition that F&F played an important role, DW -- just with the attempted whitewash that puts the lion's share of the blame on them in an effort to shift scrutiny from other parties, especially the financial industry (these attempts often misstate the mechanics of the market and the chronology of the bubble, among other flaws).

In fact, I've tried to argue often that F&F are best understood as parts of the financial industry, not something different and opposed.

[Andrew Brod]

I think the media release is off-base when it claims that Fannie and Freddie were "responsible for our financial crisis."

[David Wharton]

"F&F are best understood as parts of the financial industry, not something different and opposed."

You got that right, buddy!

[Kim]

Wall st was starved for MBS. It was a vehicle,that no one understood, for them to move piles of shit. Everyone else was an enabler.

[David Wharton]

"Wall St." and "starved" in the same sentence ... hah! ... only in the sense that this guy is starved.

[Andrew Brod]

That movie made me hungry.

[David Wharton]

Would you like a mint, sir?

[Andrew Brod]

It's only wafer thin.

[Jeff Thigpen]

Andy, I didn't mean to infer that they were the only entity responsible for the financial crisis. I do think its fair to say they had a role as one of many factors and shouldn't get a free ride on excise taxes that go to state and local governments. I think the central issue is their claim to a tax exemption from the excise tax in land transactions. On that point our position is pretty clear, we think it's highly questionable based on the US District Ct decision and the fact they are traded on the NY Stock Exchange. I wouldn't say these groups were "enablers", but more like incestuous facilitators and partners.

[Andrew Brod]

Jeff, even if your request is based on the GSEs (i.e. F&F) being merely among the entities responsible for the fiscal crisis, then it's based on a misconception and should be rejected.

Yes, the GSEs joined the party, but they didn't throw it. And yes, the GSEs have been investigated by Congress for their role in the financial crisis of 2008, but the investigations were bogus and, by the way, highly partisan. Perhaps you have to indulge such silliness in order to get both Repubs and Dems to sign on to this, but silliness it is.

However, I don't think your request actually depends logically on the GSEs having been a cause of the financial crisis. It stands on its own, don't you think? Invoking the financial crisis just muddies the waters.

[Jeff Thigpen]

Andy, our request is based on how the law governing excises taxes should apply to Fannie/Freddie. My comment about F/F and the financial crisis was my opinion.

I'm really interested in your view that F/F are not among the entities responsible for the financial crisis (or fiscal crisis). Can you drill down a bit from your point of view? Feel free to email me. jlthigpen@gmail.com

[Jeff Thigpen]

Not that I'm implying they are like "THE" reason for the crisis. But in all fairness, they have been part of a very dysfunctional housing finance system.

[Andrew Brod]

"My comment about F/F and the financial crisis was my opinion."

Right. And it muddies the waters. If that's what you're going for, then cool.

And I realize that you're not claiming that the GSEs were the only cause (though that's far from clear when your media release refers merely to "corporations responsible for our financial crisis"). I addressed that already.

I agree that the GSEs are "part of a very dysfunctional housing finance system." So is my bank, the State Employees' Credit Union. But I don't think SECU should be blamed for that system.

I've said elsewhere, perhaps on this blog, that the GSEs joined the MBS party, but they didn't throw it. Take away the GSEs and you would have had the same crisis.

[Andrew Brod]

In fact, this thread illustrates your mistake. Your request to the attorney general raises a valid issue, and I'm curious to see his opinion. But because you inserted an extraneous thread of an opinion about the financial crisis in your media release, we're arguing about something else.

[jeff thigpen]

Andy, I remain convinced this is nothing a beer can't resolve...