A federal judge has ruled that the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, does not have to follow Chicago’s vacant building ordinance.

For buildings in which the mortgage is backed by Fannie or Freddie, the ordinance would have required the FHFA to promptly register the property after it becomes vacant, pay a $500 registration fee and maintain certain property standards with fees ranging from $500 to $1,000 for infractions, the Chicago Tribune reported.

The FHFA promptly filed a lawsuit against the city after the ordinance took effect in November 2011. At the time, the agency said it owned about 258,000 mortgages in Chicago. In the case, the FHFA argued that the properties it backed were exempt from the ordinance and the city could not make law for federal agencies.

The federal judge deciding the case largely agreed with the FHFA’s arguments.

“This is not to say that FHFA can let properties where it is the mortgagee become decrepit,” the judge wrote. “Fannie and Freddie’s own guidelines, not unlike the city’s, require it to maintain the properties in a manner to preserve their value. This is consistent with their overall mandate to preserve the assets of Fannie and Freddie — a field into which the city of Chicago may not encroach.”

The decision deals a blow to a city grappling with thousands of empty buildings dragging down neighborhoods, the Tribune said. The paper also noted the decision has national implications for more than 1,000 municipalities nationwide that have similar laws on the books and are now vulnerable to similar lawsuits from the FHFA.

Source: Chicago Tribune

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription