The federal government is suing to overturn Chicago’s law requiring lenders to maintain properties they don’t own [WSJ editorial]:
Earlier this month the federal agency that oversees Fannie Mae and Freddie Mac sued Chicago for its vacant-buildings ordinance, which requires that a “mortgagee” register vacant properties, pay a $500 fee to the city, comply with onerous maintenance requirements and face a $1,000 daily fine for noncompliance. Any entity with a financial interest in the home—a bank, mortgage trust, mortgage servicer or Fan and Fred—is subject to the law, whether or not it has foreclosed on the home and owns the title….
The [Chicago enactment] came at the expense of small banks and mortgage servicers that can’t afford, for instance, to install “commercial-quality metal security panels” on windows or clean snow “from the walkway leading to the main entry door, and any public sidewalk adjoining the lot.” It’s legally dubious to impose these requirements on private owners of private property, and by doing so Chicago will raise the cost of mortgage loans to future homeowners.
More: Kevin Funnell, Bank Lawyer’s Blog; earlier here and here.
2 Comments
Nice move on The Chicago Machine’s part to steal money from people/companies that do not own the property in question. This should pretty well destroy the real estate investment sector in Chicago.
This of course does not personally effect Rahm and the rest of his as yet unindicted colleagues. I am sure they have all worked out a “Friends of Angelo” style financing of their own mansions.
If the home-debtor returns the keys to the lender, or defaults, who does own it? Are there a million different owners, each with a fraction of collateralized debt?
It would probably make the most sense to hold the homedebtor responsible for leaving the house secured, but we know that will never happen.