Fannie Mae LL-2014-03 City of Chicago Vacant Property Ordinance Update
On April 30, Fannie Mae released Lender Letter LL-2014-03, subtitled City of Chicago Vacant Property Ordinance Update.
Lender Letter LL-2014-03
To: All Fannie Mae Single-Family Servicers
City of Chicago Vacant Property Ordinance Update
This Lender Letter updates Lender Letter LL-2012-04: City of Chicago Vacant Property
Ordinance Update, issued on April 11, 2012. The City of Chicago Vacant Property
Ordinance (“the Ordinance”) imposed registration fees, fines, penalties, and
maintenance obligations associated with vacant properties located within the City of
Chicago (“the City”).
On August 23, 2013, the U.S. District Court for the Northern District of Illinois granted
the Federal Housing Finance Agency’s (“FHFA’s”) Motion for Summary Judgment
and ruled that the City may not enforce the Ordinance against FHFA, Fannie Mae as
mortgagee, or those acting on their behalf. In a Memorandum of Understanding
(“MOU”) dated March 28, 2014, FHFA and the City agreed that the City will
comply with, and will not appeal, the ruling of the Court and will not enforce the
ordinance against Fannie Mae as mortgagee. In addition, FHFA agreed that Fannie
Mae would voluntarily instruct the servicer to register vacant properties in which
Fannie Mae hold mortgage interests.
Effective May 12, 2014, the servicer must no longer remit vacant property registration
fees, penalties, or fine payments to the City, or complete any maintenance pursuant
to the Ordinance for any Fannie Mae mortgage loan prior to the liquidation of the
loan; however, the servicer must continue to register vacant properties without
payment of the fee and complete maintenance in accordance with the Servicing Guide.
To help servicers comply with the terms of the MOU when acting on behalf of Fannie
Mae as mortgagee, a copy of the signed Agreed Order of Dismissal entered into by
the Court and the MOU is attached to this Lender Letter.
Claims for Reimbursement of Ordinance Related Expenses
Servicers that have registered vacant properties in connection with Fannie Mae
mortgage loans and paid any registration fees or completed any maintenance
pursuant to the Ordinance prior to the effective date of this Lender Letter must
submit an expense reimbursement request in accordance with the Servicing Guide
by submitting a Cash Disbursement Request (Form 571) to Fannie Mae.
- Ordinance-related registration fees and maintenance expenses incurred prior to
May 12, 2014, must be submitted for reimbursement no later than June 13,
2014; the servicer is required to use expense category “Vacant Property” and is
required to include documentation to support the expense.
Failure to adhere to these submission requirements may result in Fannie Mae’s
denying the request or assessing a late submission compensatory fee.
After May 12, 2014, Fannie Mae will not reimburse the servicer for any fees, penalties,
fines, expenses, or interest assessed by the City for failure to comply with the Ordinance.
In the event that the servicer receives notice or becomes aware of attempts by the City
to enforce the Ordinance in connection with properties where Fannie Mae is
mortgagee, the servicer must provide written notice within 14 calendar days to the
City or the attorney handling the action on behalf of the City that the property is
subject to the MOU. If the City continues to pursue enforcement following such
notification, the servicer must contact their Servicing Consultant, Portfolio Manager,
or Fannie Mae’s National Servicing Organization’s Servicing Solutions Center at
1-888-FANNIE5. The servicer must retain documentation of all activities in
connection with the Ordinance and provide such documentation to Fannie Mae
This Lender Letter does not apply to Fannie Mae mortgage loans that have liquidated,
through the foreclosure process or otherwise, and are currently in Fannie Mae’s REO
Claims for Reimbursement of Servicing Guide-Related Expenses
Servicing Guide, Part VIII, Section 108: Property Maintenance and Management;
and Section 110.04: Requests for Reimbursement
As a reminder, the servicer is responsible for performing all property maintenance
functions as required by the Servicing Guide to ensure that the condition and
appearance of the property are maintained satisfactorily. The servicer must also
request reimbursement for its advances in accordance with the Servicing Guide.
The servicer should contact their Servicing Consultant, Portfolio Manager, Investor
Reporting Business Analyst, or Fannie Mae’s National Servicing Organization’s
Servicing Solutions Center at 1-888-FANNIE5 (1-888-326-6435) with any questions
regarding this Lender Letter.
Leslie A. Peeler
Senior Vice President
National Servicing Organization
Please click here to view the online letter.
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