An  ordinance passed by Chicago’s City Council could create myriad property and constitutional issues by forcing lenders to pay for maintenance on vacant homes they don’t own, the American Securitization Forum said Thursday. The Chicago ordinance, passed Thursday, raises the liability of financial institutions who have an interest in a property — and includes properties that are vacated before a foreclosure proceeding is completed. The ordinance revamps city code to make a financial institution with an interest in the  home a “property owner” by definition. With this change, a mortgagee is now required to cut the grass, shovel snow and deal with complaints tied to the property, according to Chicago Mayor Rahm Emanuel, who applauded the ordinance’s passage Thursday. The ASF sent a letter to city leaders warning that the amended ordinance could cause lenders and investors to shy away from the mortgage market over uncertainties about legal costs and obligations. New York-based default services attorney Howard Crane, a member of the Default Attorney Group, said the rule “is a departure from previously accepted rules that the property owner has the responsibility and obligation to maintain” the property, he said. Emanuel defended the ordinance saying “vacant properties often become a financial burden on the city,” with Chicago spending more than $15 million on vacant buildings last year alone. But ASF says the code ignores property rights, allowing the city to hand the tab over to parties who are not obligated to maintain the property by law. “We strongly object to the proposition that a lender can or should be considered an owner and required to undertake property maintenance responsibilities prior to assuming title to the property,” ASF wrote. “A lender under a mortgage loan or a subsequent assignee does not own the property securing a mortgage loan. Rather, the borrower owns the property and has granted a lien on the property to the lender to secure the borrower’s loan payment obligations,” the forum explained. ASF also argued that “even a defaulting borrower retains all elements of legal title to the property and the associated legal rights of possession and responsibilities for maintaining the property.” In its letter, the group fired a warning shot saying “imposing such duties and obligations on lenders, without possessory rights, contradicts established legal and constitutional property rights principles” and could become the “subject of significant legal challenges.” In a letter to Emanuel and other city officials, the Federal Housing Finance Agency, which oversees loans securitized by Fannie Mae and Freddie Mac, said “the costs imposed by the … amendment and the increased payments that borrowers would have to bear could in many instances unintentionally harm homeowners, including those who seek to avoid foreclosure,” according to the Chicago Tribune. Write to Kerri Panchuk.