Bloomberg News

Bank of America Sued for Foreclosure-Sale Taxes in Michigan

June 22, 2011

(Updates with Wells Fargo comment in ninth paragraph; Bank of America comment in 10th.)

June 22 (Bloomberg) -- Bank of America Corp., Wells Fargo & Co. and mortgage servicers were sued by a Michigan county official who claimed they failed to pay millions of dollars in transfer taxes on foreclosure sales.

The banks and other defendants were part of an effort to “inappropriately” claim state and county tax exemptions on “improperly filed deeds,” Curtis Hertel Jr., Ingham County register of deeds, said today in a lawsuit in state court in Lansing, the capital city.

Hertel also sued Federal National Mortgage Association, Federal Home Loan Mortgage Corp. and two law firms that handle foreclosures.

“We didn’t specify damages, but I believe it’s in the millions for the county and tens of millions for the state,” Hertel said today in a telephone interview. “We intend to fight for it.”

The county claims that the banks would transfer ownership of a note to Fannie Mae or Freddie Mac to avoid transfer taxes in foreclosures, Hertel said.

“Fannie and Freddie would foreclose and claim the exemption” on transfer taxes allowed for government entities, he said.

As companies, not government entities, Freddie Mac and Fannie Mae aren’t eligible for the exemptions, he said.

The official transfer tax rate for counties in Michigan is $1.10 for every $1,000 of value being transferred, he said. “I want whoever is responsible to pay the transfer tax.”

“At this point, we’re reviewing the complaint,” Jason Menke, a spokesman for San Francisco-based Wells Fargo, said in an e-mail. “Until that review is complete, it would be premature for us to provide comment on this issue.”

Rick Simon, a spokesman for Charlotte-North Carolina-based Bank of America spokesman, said in an e-mail that “the bank has not had an opportunity to review this complaint as we have not been served yet.”

The case is Hertel v. Bank of America N.A., 11-687-CZ, Circuit Court, Ingham County, Michigan (Lansing).

--Editors: Andrew Dunn, Fred Strasser

To contact the reporter on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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