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Volume 12 - Opinions of Counsel SBRPS No. 21

Opinions of Counsel index

United States government property exemption (Federal Home Loan Mortgage Corporation (Freddie Mac)) (Federal National Mortgage Association (Fannie Mae)) - Real Property Tax Law § 400:

Property acquired by the Federal Home Loan Mortgage Corporation (Freddie Mac) and by the Federal National Mortgage Association (Fannie Mae), including that which they may acquire through mortgage foreclosure, is subject to taxation.

We have been asked whether the federally chartered entities Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae) are tax exempt.

We have discussed the taxable status of federally-owned property in several of our previous opinions. In 1 Op.Counsel SBEA No. 40, we noted stated that: “Federal property may be subjected to local taxation only to the extent Federal legislation consents.” In the absence of such consent, we concluded therein that “any taxes levied after the [Small Business] Administration took title but prior to lien date are illegal and unenforceable.”  {1}  We similarly concluded that property acquired by the Economic Development Administration is exempt (1 Op.Counsel SBEA No. 36). In contrast, in 5 Op.Counsel SBEA No. 56, we concluded that property acquired by the Farmers Home Administration is subject to taxation because of a statutory waiver of sovereign immunity (42 USC § 1490h).

Freddie Mac and Fannie Mae are entities created by the federal government to provide liquidity and stability in the housing market. In the course of their business they routinely purchase mortgages. Although created by separate federal statutes, both Freddie Mac and Fannie Mae have virtually identical statutory provisions which, like that of the Farmers Home Administration, provide they shall be exempt from all state and local taxation except “that any real property of the [Corporation or Association] shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed” (12 USC §§ 1452(d), 1723a(c)(1); see also Byram Holding Corp. v. Bogren, 2 NJ Super 331, 63 A2d 822 (1949)). Accordingly, in our opinion, property acquired by Freddie Mac and Fannie Mae, including that which they may acquire through mortgage foreclosure, is subject to taxation.

January 2, 2009


{1}  We reiterated the immunity of property acquired by the Small Business Administration in 10 Op.Counsel SBRPS No. 112.

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