Buyers and sellers are hitting snags under Chicago’s new anti-gentrification ordinance

I was quoted several times in this Crains Chicago Business article published today about how Chicago’s poorly thought out Anti Gen ordinance does the exact opposite of its intention in discriminating against low income and low down payment buyers.

Fortunately, I was able to get my buyer, Tatianna who is a 1st time multi-unit investor, financing through the creative efforts of my Lender, Tom Fishwick of Cross Country Mortgage.

Tatiana was referred to me from previous investor clients, Dean & Alyssa, and wanted to buy her 1st multi-unit property for purposes of wealth building and diversification. After some perspiration, we found a killer deal on a 4 Flat in prime Logan at 3625 West Wrightwood, that already had high rents, where bedrooms and bathrooms could be added to make the monthly rental income increase dramatically.

This was an A+ Deal where we were at the very first showing, made an offer that same day, were the 1st offer in, & made the offer timed to get a quick acceptance. The seller got several other offers, but they were treated as backups as we were already under contract.

Tatiana, was planning on buying the property under the Multi-units Fannie Mae program where you can put as little as 5% down.
At the closing table, the title company did not accept the seller’s documentation for compliance with the new Anti Gentrification Ordinance.
We postponed the close 2 weeks, and finally got the documentation from the City that appeased title.
However, the minute we got the ordinance added to title, Fannie Mae would not approve the loan as it included the tenant’s Right of First Refusal.
Fannie Mae does not like ROFR because it can make it harder for them to sell the property if there is a foreclosure.

Thankfully, Tom ad I were able to find a loop hole to get deal financed and closed, but the City’s ordinance that passed without any real estate broker consultation, was a real issue that could of killed the deal punishing a low 5% down buyer, which is the exact opposite of what the ordinance is intended to do.

Key Parts OF Article Where I’m Quoted:

“Greg Nagel, of the brokerage Ask Nagel Realty, ran into the financing problem with clients who were looking to spend $1 million on a four-flat in the ordinance zone, their first investment property. Their experience turned out to be “ridiculous,” he said, and killed the deal.”

“Small investors like Nagel’s clients usually go through Fannie Mae because it will accept down payments as low as 5% for small investment properties, while Freddie Mac requires 20%. ”

“Nagel, Fishwick and Luke Blahnik, an @properties Christie’s International Real Estate agent working in the ordinance zone, all said the result would likely be that tenants trying to buy and small investors would quickly be supplanted by big portfolio investors who routinely put down 20% or more and thus could bypass Fannie Mae for financing.”