As of May 1, Fannie Mae servicers will begin making payments for Chicago’s vacant property ordinance, though they will do so under protest.
According to the Department of Housing and Urban Development, Fannie servicers will be required to include a written form of protest along with the ordinance’s required $500 registration fee. The GSE issued the mandate by letter to its servicers.
First passed by the city of Chicago in October, the ordinance requires that lenders both register and pay a $500 fee and maintain upkeep and maintenance on all of foreclosed properties that they own within 60 days of the property’s default.
The Federal Housing Finance Agency (FHFA) filed a lawsuit against the city of Chicago and even asked that a summary judgement be made in the case, meaning the judge would make a decision before the case actually went to trial. The judge in the case, Joan Lefkow, sided with the city of Chicago and ordered they file a response to the FHFA. The agency was unable to request another summary judgement until late February.
The Chicago Tribune reported that Lefkow told attorneys that the matter was completely about legality.
“If FHFA has no responsibility to do what the ordinance says, then the case is over,” Lefkow told attorneys. “It doesn’t depend on the facts. It depends on the law.”
Freddie Mac also told its servicers to pay the $500 fee and include a written form of protest in February.
At the heart of the GSEs’ disputes is the ordinance’s registration fee, and the considerable fines that could result if the lender does not adequately maintain the foreclosed property. Because of the GSEs dependence on taxpayer funds, they have argued for exemption from the ordinance, so as to avoid unnecessary losses and further fund infusions from the public.