Reagan Appointed Federal Judge Upholds MERS Tax Dodging Scheme In Michigan

On Friday, Judge Robert Holmes Bell dismissed Ingham County Register of Deeds Curtis Hertel’s lawsuit seeking unpaid Michigan Real Estate Transfer Taxes on property being transferred in and out of Fannie Mae, Freddie Mac with the use of the MERS database system.

Holmes ruled that Hertel and Branch County Register of Deeds, Nancy Hutchins lacked legal standing to bring the suit because tax enforcement is a power vested with the state Treasury and notary fraud or signature fraud is the responsibility of law enforcement.

Holmes wrote in his opinion, “Michigan statutes expressly define the powers of registers of deeds… but no statute authorizes a register of deeds to file lawsuits. Moreover, no statute empowers a county’s board of commissioners to authorize a register of deeds to do so.”

Bell dismissed the claims about the unpaid transfer taxes by lenders, MERS, Fannie Mae and Freddie Mac holding that “none of the assignments submitted by plaintiffs were subject to the transfer tax.”

With regard to the assignments of mortgages, the judge relied on a recent decision by the U.S. Court of Appeals for the Sixth Circuit, McLaughlin v. Chase Home Finance, which held that “[a]ssignments of mortgages… are specifically exempt from transfer taxes under” Michigan law.

Bell also stated in his brief that the evidence submitted shows that the purchaser of the foreclosed note already has a beneficial interest and therefore exempt by saying, “who foreclosed on and purchased properties in their capacity as agents of lenders, return the properties to the lenders, who at all times maintain the beneficial ownership interest in the debt and the property securing the debt.”

In regards, to Fannie Mae and Freddie Mac being exempt from the Michigan Real Estate Transfer tax, Bell ruled the opposite of Federal Judge Victoria Roberts of the Eastern District of Michigan by claiming they are exempt state transfer taxes because they are chartered by the government of the United States and are government agencies.

In Oakland County, Et Al v. Federal Housing Finance Agency, Federal National Mortgage Association and Federal Home Loan Mortgage Corporation (Case No. 11-12666), Judge Roberts re-affirmed the September 2011 U.S. District Court of Nevada ruling determining Fannie Mae and Freddie Mac were not government agencies. She cited, Nevada v. Countrywide Home Loans, 812 F.Supp 2d 1211, 1216-18 (D.Vev. September 16, 2011).

Judge Roberts ruled that a transfer tax is an excise tax and Fannie Mae and Freddie Mac are not exempt from federal excise taxes and that they are required to pay the Michigan Real Estate Transfer Tax when they transfer the ownership of a property out of their name.

Judge Robert Holmes Bell’s ruling:

Hertel v. Mers by Steve Dibert