Federal agency sues Chicago over vacant property

The Federal Housing Finance Agency recently filed suit against the city of Chicago in federal court. The lawsuit aims to exempt all properties that are owned by Fannie Mae or Freddie Mac from Chicago's vacant buildings ordinance.

The Chicago Tribune reported the city is working to help neighborhoods facing high foreclosure rates deal with the increase of distressed properties. If the FHFA wins the case, it could further harm Chicago's efforts to clean up areas that were hit hardest by the subprime mortgage crisis.

The source reported that if the FHFA loses the suit, the properties will be forced to fall under the ordinance, which, in turn, could increase the cost of new and refinanced mortgages for Chicago homeowners in order to cover the expenses associated with the ordinance's rules.

The Wall Street Journal reported the FHFA claims the ordinance is unfair because it imposes the costs of ownership of the properties with no benefits, including the right to sell or lease the property. The FHFA also believes the ordinance violates a federal law, as it subjects Fannie Mae and Freddie Mac mortgages to the rules of the ordinance. Fannie Mae and Freddie Mac are under the jurisdiction of the FHFA, and the agency believes it should be exempt from state laws.

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