The city of Chicago said on Tuesday that it would vigorously defend a lawsuit filed by the Federal Housing Finance Agency (FHFA), which challenges an ordinance regulating the maintenance of vacant properties.
Stephen Patton, an attorney for the city of Chicago, wrote in a letter to the FHFA that it was in the best interest of both Fannie Mae and Freddie Mac, the agencies the FHFA oversees, to have common sense steps to maintain the homes, which would help sustain property values and neighborhood conditions.
In short, far from costing Fannie Mae and Freddie Mac money, this ordinance saves them money by preserving housing stock and maintaining property values, wrote Patton.
The local law requires buildings owners and mortgage holders to register vacant properties for $500 and maintain them by securing the properties, removing garbage and cutting grass and weeds. Violating the ordinance could cost property owners up to $1,000 per day.
Patton said that the city spent over $15 million in demolishing, boarding up and maintaining buildings and garages in 2010. He also cited a study that estimated that one foreclosed, demolished property on a Chicago block led to a $17,000 decrease in value for 13 surrounding properties.
Patton criticized the FHFA for spending taxpayer money to file the ill-conceived suit and for not participating in meetings that the city held with major lenders and mortgage holders.
The FHFA had argued that Fannie Mae and Freddie Mac, the agencies it oversees, would be liable to maintain properties that they did not own because the foreclosure process wasn't complete. It also said that the new ordinance imposed taxes and fees that the agencies were exempt from while under federal conservatorship.