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Foreclosure Defense Florida

Transfer Taxes in Foreclosure Proceedings

The Real Party in Interest in Foreclosures Is NOT The Banks!

TRANSFER TAXES


Reimbursement of transfer taxes


As stated in Section 71.24, Non-Reimbursable Expenses, Freddie Mac does not reimburse Servicers if they paid
transfer taxes in connection with the recording of deeds conveying real estate to Freddie Mac after a foreclosure
or deed-in-lieu of foreclosure. Freddie Mac does not reimburse such payments because it is exempt from such
taxes pursuant to its federal charter (Title 12 of the United States Code, Section 1452(e)) and other applicable
law. However, several localities still demand that the transfer taxes be paid. In most of these jurisdictions, pending
litigation has been initiated in order to resolve the dispute, but in limited circumstances it may be advisable to pay
the transfer taxes under protest until the litigation is completed.
We have therefore updated the Guide to provide that a Servicer Servicing a Mortgage owned or guaranteed by
Freddie Mac will be reimbursed for transfer taxes if:
• Local authorities require the Servicer to pay the transfer tax in order to record a deed and ensure that
title vests appropriately
• The transfer tax is paid under protest
• The Servicer submits the request for written pre-approval (RPA) for reimbursement of the transfer tax via
the Freddie Mac Reimbursement System, and
• Foreclosure counsel could not process the foreclosure in a manner that would successfully avoid the
imposition of the transfer tax obligation
Servicers must use expense code 074003 (Transfer Tax) when submitting an RPA or subsequent claim in
the Reimbursement System. RPAs may be submitted prior to the foreclosure sale or after the foreclosure
sale if the property is not purchased by a third party and must be accompanied by supporting documentation
including, but not limited to, proof that the transfer tax was paid under protest.
Servicers will not be reimbursed for transfer taxes if any of the above conditions and requirements do not
exist or are not met.
Sections 66.54, Vesting the Title and Avoiding Transfer Taxes, and 71.24 have been updated to reflect these
requirements.
Foreclosing in Freddie Mac’s name
Foreclosures must normally be processed or litigated in the Servicer’s name. However foreclosures must also be
processed in a manner that would avoid any obligation to pay a transfer tax. We have therefore updated
Section 66.17, Foreclosing in the Servicer’s Name, to allow the Servicer to instruct foreclosure counsel to conduct
the foreclosure in Freddie Mac’s name without obtaining prior written approval if:
• Applicable law would require the foreclosure to be processed in Freddie Mac’s name to avoid any
obligation to pay a transfer tax, and
• Foreclosure counsel could not otherwise process the foreclosure in a manner that would successfully
avoid the imposition of the transfer tax obligation
In such circumstances, the Servicer must notify Freddie Mac via e-mail at
Nonroutine_litigation@freddiemac.com within two Business Days of the Servicer’s determination to foreclose
in Freddie Mac’s name and record the basis of the decision in the Mortgage file.
Executing documents
As a reminder, if Freddie Mac needs to execute a document for the Servicer to conduct the foreclosure, the
Servicer must submit the document (which must be sent along with Guide Form 105, Multipurpose Loan Servicing
Transmittal) to us via e-mail at