Oral Arguments Heard In NY Mortgage Tax Case

NEW YORK-Oral arguments were heard last week in court here as the state sought to dismiss Hudson Valley FCU's challenge of a New York state assessment required on credit union mortgage loans. The hearing in the Supreme Court of New York County centered on whether a federal credit union (and its members) must pay a mortgage registration fee to the state to record its mortgages. Both CUNA and the Credit Union Association of New York have filed friend of the court briefs in the case, which Poughkeepsie-based VFCU filed in Mary of 2009. The credit union, which is arguing it is exempt from the mortgage recording tax, reported it has paid approximately $3 million in such taxes on "no closing cost" loans to members and is seeking a refund of the tax in a separate proceeding. The state is arguing that FCUs are not federal instrumentalities and must pay the tax.