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player ready...While the Federal Housing Finance Agency and Chicago battle in court over the city’s vacant property ordinance, Fannie Mae has decided to more directly involve mortgage servicers in protesting the new rules.
On Wednesday, Fannie Mae notified mortgage servicers that, beginning May 1, when they register Fannie Mae-backed vacant properties with the city and make any payments, they must communicate in writing that the payment is being made “under protest.” The communication, Fannie Mae said, “must note that the Federal Housing Finance Agency determined that the registration fee does not apply to Fannie Mae, and that the registration fee therefore is paid under protest.”
The city’s ordinance, which took effect Nov. 19, requires mortgage holders to pay a one-time fee of $500 to register a vacant building with the city’s building department 30 days after it becomes vacant or 60 days after the mortgage goes into default, whichever is later.
The mortgage holder then must ensure that the property is secured and its yard is free of trash, the grass is cut and the porches are structurally sound. Daily fines for a violation can reach $1,000.
Between Nov. 19 and April 5, 3,544 vacant properties were registered with the city, according to the Chicago Department of Buildings.
In mid-December, the FHFA, which oversees both Fannie Mae and Freddie Mac, filed suit against the city in federal court, arguing that Fannie and Freddie-backed properties were exempt from the ordinance because of the FHFA’s role as sole regulator and supervisor of the agencies. That case continues and in recent court hearings, attorneys for the FHFA have said there is little chance of a compromise settlement.
Fannie and Freddie own about 258,000 mortgages in Chicago; that sum includes mortgages that are current and those that are delinquent and the properties are possibly vacant.
Also on Wednesday, Fannie Mae warned servicers that it will not reimburse them for any fines and expenses they incur as a result of not complying with the ordinance.
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