0
0
0

A New Chapter in the FHFA/Chicago Standoff

by Chicago Agent

A Chicago ordinance directed at the city's 18,000 vacant homes has not sat well with the FHFA.

The saga continues in the ever-complicating fight between the city of Chicago and the Federal Housing Finance Agency (FHFA) over a vacant housing ordinance the city passed in October to combat plummeting home values and rising crime rates through charging servicers with various fees.

In the latest chapter, Freddie Mac has advised its Chicago-based servicers to pay the fees in protest, in order to be reimbursed for the costs.

According to a HousingWire article on the latest anti-ordinance action by the FHFA, all payments to Chicago by Freddie and Fannie servicers must be accompanied by a letter from the FHFA stating that the ordinance does not apply to the GSEs. Though the GSEs do reimburse services for the ordinance-related expenses (hence the FHFA’s lawsuit), Freddie has updated its guidelines to, apparently, further complicate the procedure. Not, in addition to the FHFA’s letter, servicers must follow a unique set of codes and paperwork to receive reimbursement for the ordinance’s fees and fines.

And, according to HousingWire, the rules will change further on March 1, when servicers must be pre-approved through the reimbursement system for each expense, a process the article fears could draw out the foreclosure process even further. Already, it takes nearly 600 days on average for Illinois foreclosures to be completed.

Originally passed late last year, Chicago’s ordinance 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, along with fighting the spread of crime (vacant properties have been hot beds for criminal activity) and salvaging county’s falling tax revenues.

The FHFA, however, took immediate difference to the ordinance, filing a lawsuit against Chicago that alleged it was unfair for Fannie Mae and Freddie Mac, the GSEs the FHFA regulates, to pay for properties before they technically foreclose and own them. The FHFA has been extremely aggressive in its legal response, even asking for a summary judgment in the case to dismiss the ordinance not before it went to trial, but before the city presented its legal defense against the charges.

Read More Related to This Post

Join the conversation

[gravityform id="3" title="true" description="false" ajax="true"]