Letter to Mel Watt, Director of the Federal Housing Financing Agency - Affordable Housing in Chicago

Letter

November 14, 2014

Mel Watt
Director
Federal Housing Finance Agency
Constitution Center
400 7th Street, SW
Washington, D.C. 20024

Dear Director Watt:

We are writing in regards to the Federal Housing Finance Agency's (FHFA) Neighborhood Stabilization Initiative (NSI), which we understand will soon be implemented in Chicago. The after-effects of the foreclosure crisis continue to have a negative impact on all regions of the city, ranging from distressed areas hit hardest by the foreclosure crisis to changing areas experiencing rapid rates of gentrification. In order for the NSI to truly help stabilize the city of Chicago, strategies need to be developed for both weak and strong markets, and should take into account local, common sense policies that keep families in their homes.

In opportunity areas like Albany Park, North Park, Irving Park and West Ridge, the foreclosure crisis has decimated the affordable housing stock, as cash investors flip foreclosed properties into luxury rentals or pricey single family homes. This means many low-income residents who have lived for a long time in these traditionally socioeconomic and cultural diverse communities are at risk of being displaced from their homes, schools and communities. FHFA has a chance to make a significant impact in these areas, especially considering that Albany Park Neighborhood Council (APNC) leaders found that Fannie Mae and Freddie Mac (the GSEs) owned nearly 44% of foreclosed properties in the Albany Park area from 2012-2013.

To help mitigate the negative effects of the foreclosure crisis, the city of Chicago passed the Keep Chicago Renting Ordinance, which provides incentives for owners of foreclosed properties to keep rental units occupied post-foreclosure. APNC has been in communication with the NSI implementation team to advocate for a pilot project with 20 Fannie Mae and Freddie Mac owned properties that have already been identified by APNC. This project would keep renting families in their homes when a third party buys the property and preserve affordability in these Fannie Mae and Freddie Mac owned 2-4 unit properties located in stronger markets. APNC has secured the financing to make the project successful, enlisted the services of a mission-minded developer who will preserve the properties as affordable, and gained the support of local Aldermen and City of Chicago leaders. What is needed is for Fannie Mae and Freddie Mac is to sell these properties to this developer at a price that will ensure that the properties remain affordable.

The foreclosure crisis provides us with a unique opportunity to make an immediate and positive impact on Chicago's neighborhoods. Under your leadership, we are hoping that post-foreclosure strategies for both strong and weak markets in Chicago can be developed, including in changing markets like Albany Park, North Park, Irving Park and West Ridge. APNC's pilot project provides a clear opportunity to help stabilize a changing community and preserve its affordable housing stock, which is what NSI is supposed to be about.

We would like to set up a meeting with you, APNC's team and your NSI team to discuss these important issues. Additionally, considering some of these properties are already listed for sale and at risk of being sold to investors, we ask that you issue a moratorium on selling Fannie Mae and Freddie Mac properties in the 60618, 60625, 60630, 60645 and 60659 zip codes until we discuss the parameters of APNC's pilot project.

Sincerely,

U.S. Representative Luis Gutiérrez (IL-04)
U.S. Representative Mike Quigley (IL-05)
U.S. Representative Jan Schakowsky (IL-09)

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