The Federal Housing Finance Agency (FHFA) has filed a lawsuit in the U.S. District Court for the Northern District of Illinois against the City of Chicago to prevent enforcement of the city's recently amended vacant buildings ordinance against the government-sponsored enterprises (GSEs).
In a statement issued by the agency, the FHFA claims that it ‘reluctantly took this action after undertaking efforts to discuss these matters and to seek alternative solutions to the problem of vacant properties that the ordinance seeks to address. FHFA indicated that the ordinance could affect costs for homeowners in the city.’
According to the FHFA, the ordinance requires mortgagees to pay a $500 registration fee for vacant properties and requires monthly inspections of mortgaged properties to determine if they are vacant. The ordinance also requires the GSEs to pay the registration fees and to comply with these maintenance requirements even when the GSEs have not foreclosed upon a property and do not have ownership of the property. If the GSEs fail to comply with the ordinance, the FHFA adds, the Chicago city government may levy fines and penalties of up to $1,000 per day for noncompliance with any provision of the ordinance.
‘The ordinance would impose on the enterprises the responsibilities, but not the benefits, of ownership of vacant property on which they hold mortgages,’ says the FHFA. ‘The ordinance would create risks and liabilities for the enterprises at a time when they are already supported by taxpayers, including those in the city of Chicago. Additionally, the ordinance would subject the enterprises to the regulation and supervision of the Chicago Department of Buildings instead of FHFA, as Congress intended.’