Spokane sues Fannie Mae and Freddie Mac

SPOKANE, Wash. - The city of Spokane, Washington is suing Fannie Mae and Freddie Mac. The class-action suit claims the two mortgage giants should have to pay a real estate excise tax to Spokane and dozens of other cities across Washington.

When a piece of property is sold in Washington, the seller usually pays a real estate transfer fee. Cities use the tax to fix things like potholes and sewer lines. But Fannie Mae and Freddie Mac say don’t have to pay the tax because they're government-sponsored enterprises.

Spokane counters they're also publicly traded companies, that have sold hundreds of foreclosed homes in Spokane since the housing crash.

City attorney Nancy Isserlis says Fannie and Freddie owe millions of dollars in back taxes – plus interest.

“We have a responsibility as a city to go pursue aggressively any entity that owes the city money," she says. "And we believe that Fannie Mae and Freddie Mac should not have claimed the exemption when they sold real estate.”

Representatives from both Fannie Mae and Freddie Mac declined to comment. Spokane joins a chorus of other cities and counties in at least eight other states that have filed similar lawsuits.

Neither Oregon nor Idaho have real estate transfer taxes.

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