Skip to main content

FHFA Takes Legal Action Against the City of Chicago Over Vacant Buildings Ordinance
Dec 12, 2011

The Federal Housing Finance Agency (FHFA), on its own behalf and as conservator of the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, 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 GSEs. FHFA 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. The ordinance would impose on the Enterprises the responsibilities, but not the benefits, of ownership of vacant property on which they hold mortgages. 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 GSEs to the regulation and supervision of the Chicago Department of Buildings instead of the FHFA, as Congress intended. 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 Enterprises have not foreclosed upon a property, and therefore, do not have ownership of the property. If the GSEs fail to comply with the ordinance, the city may levy fines and penalties of up to $1,000 per day for noncompliance with any provision of the ordinance. Additionally, the ordinance sets forth detailed maintenance requirements which may be revised and amended by the Department of Buildings. The lawsuit alleges that the city’s ordinance impermissibly encroaches upon FHFA’s role as the sole regulator and supervisor of the GSEs. As conservator, FHFA has been charged with the responsibility of preserving and conserving the assets of the GSEs. This lawsuit seeks to ensure that the city’s proposed registration and licensing system and “supervision” of the GSEs by the Department of Buildings will not thwart Congress’s intent. Further, the registration fee represents a tax on the GSEs and the conservator that is expressly precluded by long-standing congressional directive.
Dec 12, 2011
6 Federal Agencies Seek Comment On Proposed Rule For AVMs

The rule is intended to ensure the credibility and integrity of Automated Valuation Models.

FHA Proposes New Program To Help Struggling Homeowners

Legal expert questions whether agency has authority to implement the program.

Fitch Places Fannie, Freddie On Negative Ratings Watch

Ties credit rating to outcome of U.S. debt limit negotiations.

FHFA Director Strongly Defends New GSE Pricing Framework 

Tells House committee it’s “simply not true” that financially stronger borrowers are subsidizing others.

MBA CEO Criticizes Government Response To Economic Challenges

CEO Bob Broeksmit calls for sensible Regulation, clarity, and support for the mortgage industry.

Freddie Mac Updates Income Assessment Tool To Use Digital Pay Stubs

Says new capability helps lenders calculate borrower income more quickly and precisely.