Chicago Prevails in Preamble to FHFA Trial

by Chicago Agent

The FHFA/Chicago lawsuit will continue as planned, despite the government agency's earlier request for a summary judgment.

The city of Chicago experienced a mini-triumph on Thursday when a federal judge ruled against an early filing by the Federal Housing Finance Agency (FHFA) in its lawsuit with the city over its vacant housing ordinance, according to a report by the Chicago Tribune.

Seeking to resolve the lawsuit as quickly as possible, the FHFA had asked the courts for a summary judgment, meaning a ruling by the court in the agency’s favor before the lawsuit reached trial.

The vacant housing ordinance in question, which was passed last November, requires the owners of vacant properties to perform regular maintenance beginning within 60 days of the property’s default and pay a $500 registration fee. Owners would need to board windows, shovel snow, trim the grass and perform other tasks to uphold the property’s – and neighborhood’s – value and esteem, lest they face fines of up to $1,000 a day.

Though the ordinance was primarily erected to maintain property values (a GAO report found that vacant homes can reduce the value of neighboring properties by up to $17,000), it met immediate resistance from the FHFA, which argued that Fannie Mae and Freddie Mac properties, the two GSEs the agency regulates, should be exempt from the strict standards of the ordinance.

According to the Tribune story, the judge overseeing the lawsuit, Joan Lefkow, gave two orders in her ruling – Chicago is to file a response to the FHFA, and the agency cannot file another summary judgment until late February.

The Tribune did note, though, that some of Lefkow’s comments seemed considerate of the FHFA’s position, which maintains that as Federally-managed buildings, city law has no jurisdiction over the maintenance of the homes.

“If FHFA has no responsibility to do what the ordinance says, then the case is over,” Lefkow said. “It doesn’t depend on the facts. It depends on the law.”

The Tribune also highlighted the opposing arguments from the city’s attorney, Michael Dolesh, who argued that the FHFA’s own guidelines for mortgage servicers direct them to follow local ordinances.”

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