A lending giant is siding with a small tenant association in a lawsuit against a South Side apartment owner, signaling a potential power shift between multifamily landlords, their lenders and residents in Chicago when it comes to regulating housing quality.
The Federal Home Loan Mortgage Corp., better known as Freddie Mac, has sued Apex Chicago IL, owner of the Ellis Lakeview Apartments, and is pursuing foreclosure on the site because of allegedly substandard living conditions, Injustice Watch reported. Freddie Mac holds the $11 million mortgage on the 11-story, 105-unit property first built in 1971, and says the loan agreement is being breached because units have been kept in disrepair, with issues stemming from plumbing problems to pest control.
With the litigation, Freddie Mac is digging in a new trench to enforce mortgage agreements with borrowers, housing experts including Kate Walz, associate director of litigation at the National Housing Law Project, told the publication.
“This is actually an example of public agencies really stepping up to protect tenants; to protect an important federal subsidy; and to ensure people are living in decent, safe, and sanitary housing,” Kate Walz, associate director of litigation at the National Housing Law Project, told the outlet. “But it’s also an anomaly.”
Federal mortgage agencies don’t usually wade into fights over living conditions at affordable housing properties, and instead enforce their remedies to regulate living conditions by simply yanking subsidies from problematic landlords. But that can force tenants with rent vouchers in a bind, forcing them to quickly find a landlord who will accept their subsidy.
The agency released a statement in May affirming its “public mission to support the availability of safe, decent, and affordable housing” by seeking ideas to better track living conditions for multifamily properties backed by Fannie Mae and Freddie Mac mortgages.
Read more
Development
Chicago
Individual lenders pull CA Ventures into string of lawsuits as firm seeks liquidity
Residential
Chicago
Lawsuit filed against real estate investors Jon and Julian Mickelson
Commercial
Chicago
Arbor hit with lawsuit over finder’s fee in Emerald Empire deal
Allegations that cockroaches, mold and mice droppings were present in the housing prompted long-time South Side resident Victoria Davis to form the association several years ago as she dealt with the conditions in her unit at Ellis Lakeview. Davis and fellow tenant advocates tallied their first win in March 2021, when the city took Apex to court to address the living conditions.
The case is still pending, and over a dozen repair requests have yet to be handled. However, Freddie Mac’s lawsuit bodes well not only for Davis’ team, but for tenants across the city.
Freddie Mac claims that Apex violated its loan agreement by not maintaining the property. The lender is requesting that a court-appointed receiver immediately takes control of the site to make repairs and “ensure the health and safety of the tenants,” the lawsuit says. There’s allegedly $3.4 million of repairs that are needed.
— Quinn Donoghue