Dec 14, 2011
A federal agency’s legal challenge to the city’s vacant properties ordinance is “astounding,” said Braden Listmann of Action Now.
The group is one of several community organizations making up the Foreclosure Convening, the coalition that earlier this year won a new provision holding lenders and servicers responsible for maintaining vacant homes following foreclosure.
The Federal Housing Finance Authority filed a lawsuit Tuesday arguing that Fannie Mae and Freddie Mac are exempt from local supervision or regulation. The two corporations, which are supervised by FHFA, hold mortgages on over 250,000 Chicago homes and use over 200 banks and mortgage companies to service the loans.
Listmann said that Fannie and Freddie’s contracts require servicers to abide by state and local laws and ordinances.
He points out that Fannie and Freddie have refused to modify troubled mortgages with principal reductions. “Instead of writing down $20,000 on the principal and getting the rest back over 30 years, they’re foreclosing on homes,” he said. “After the buildings become vacant and fall apart, they’re selling them for $10,000 or $20,000 – enough to cover the servicers’ fees.”
“And now with this lawsuit, the FHFA is admitting that they don’t even want to take care of the vacant properties that result from their policies,” he said.
Mayor Emanuel has vowed to defend the ordinance – and Wednesday morning, Cook County commissioners unanimously passed a similiar measure.
“These abandoned vacant properties are left to deteriorate and attract drug and gang activity, violence, graffiti, garbage and debris,” according to a statement from the Foreclosure Convening.
“They threaten the safety of children, neighbors, police and firefighters, lower the property values of surrounding homes and drain the city’s budget. Taxpayers shouldn’t be forced to pick up the bill for Fannie Mae and Freddie Mac’s negligence.”