U.S. District Court Judge Thomas Durkin ruled that the city of Chicago cannot enforce its vacant buildings ordinance against banks that service mortgages for Fannie Mae and Freddie Mac, which own or guarantee most home loans in the United States. This decision undermines a key tool that helps keep homes in the foreclosure process from becoming “zombie properties” that decrease quality of life. 

The Federal Housing Finance Agency, which oversees Fannie and Freddie, filed a lawsuit against the city soon after it passed an expansion of its vacant buildings ordinance in 2011. The ordinance was expanded to address a very real problem: Frequently, no one was taking care of homes stuck in the foreclosure process, leaving them to fall into disrepair. 

Homeowners often leave their property shortly after the bank that's serving the mortgage files a foreclosure case. But these cases can languish in the court process for a year or more until the bank or a third party buys the property at auction. Distressingly, some banks abandon the foreclosure process after filing for foreclosure, leaving the property vacant and in legal limbo. 

The result was that thousands of vacant properties in Chicago deteriorated. 

Meanwhile, the city was unable to hold the banks accountable for maintaining properties that were blighting our communities. In 2011, our research found that nearly 1,900 vacant properties were stuck in the foreclosure process without any clear resolution. These properties were likely poorly maintained and threatened neighborhood stability by attracting crime, lowering property values and causing blight. We estimated that these properties cost the city of Chicago $36 million in maintenance, security and administrative costs. 
 

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