Steve Dibert, MFI-Miami

Ingham County Register of Deeds Curtis Hertel Jr. has filed a lawsuit today in the 30th Circuit Court, to recover millions in alleged unpaid transfer taxes from mortgage lenders and their attorneys.

Ingham Hertel Complaint

“This is money that should have been applied to the county’s general funds, which could have been used for public safety, health programs, or countless other public services,” said Hertel. “Additionally, the state taxes collected would have gone straight to the school aid fund.  It’s time for some of the banks responsible for the foreclosure mess to pay their fair share, instead of allowing our county’s taxpayers to bear all of the burden.”

Transfer taxes are the monies paid when a new deed is recorded in the county’s Register of Deeds office.  The taxes apply to the sale price of the property being transferred, unless it falls under $100.  Many large-scale banks have used Fannie Mae and Freddie Mac to claim an exemption to the taxes by identifying themselves as government entities, which Hertel contests.

”Depending on the amount of the judgment, this could provide a needed boost to our county’s constrained budget,” said Ingham County Treasurer Eric Schertzing.  “The foreclosure crisis has drained county tax dollars in many ways – not merely in uncollected property taxes, but also because Fannie Mae and Freddie Mac were claiming these federal exemptions while re-selling foreclosed homes.”

The official transfer tax rate for counties in Michigan is $1.10 for every $1,000 of value being transferred.  So the sale of a $100,000 home would typically carry a $1,100 tax.  State taxes on the same transactions stretch even further – $7.50 for every $1,000 of value being transferred.  It is estimated that the lawsuit could fetch a judgment in the millions of dollars.

“MFI-Miami, an internationally recognized mortgage fraud investigation firm based in Florida, has been instrumental in assisting in our investigation of this,” said Hertel.  William Maxwell, Dan Marsh and Brian Parker from the Home Defense League, PLC, working in conjunction with MFI-Miami discovered a pattern of unpaid transfer taxes on foreclosure sales across Michigan.    “The fact is banks and mortgage servicers, in concert with their foreclosure firms, failed to pay state and county transfer taxes,” said Steve Dibert of MFI-Miami, who has been part of the document examination.

Hertel is also working with other members of the Michigan Association of Registers of Deeds.  “We are cooperating with other municipalities to join us in this fight, because this not just an Ingham County problem, it a problem that affects all 83 counties in the state.”

“Currently, the Michigan Association of Registers of Deeds, Inc. is compiling data from documents representing taxable transfers from these and other entities to determine the potential amount owed Michigan counties,” said president Bambi Somerlott.  “Accordingly, each county will, in its discretion, use the information and proceed as they deem appropriate.”

“The banks should bear their share of responsibility for our current housing climate, and their role in what has happened is becoming more clear as time passes,” said Hertel.  “We will do everything we can to pursue financial justice.”

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