Supreme Court to Decide Lawfulness of FHFA Structure

The United States Supreme Court (USSC) will hear arguments in a case that challenges the single-director leadership structure of the Federal Housing Finance Agency (FHFA), just weeks after a ruling in which it deemed a similar structure at the Consumer Financial Protection Bureau (CFPB) unconstitutional.

“The justices granted a pair of cases, Collins v. Mnuchin and Mnuchin v. Collins, involving a challenge to the structure of the Federal Housing Finance Agency,” writes reporter Amy Howe for SCOTUSblog. “The court ruled earlier this term that the Consumer Financial Protection Bureau’s similar structure is unconstitutional; the challengers have asked the justices to weigh in on what the remedy should be if the FHFA’s structure is also unconstitutional.”

The question is being raised amidst a case that more closely examines the federal conservatorship of housing agencies Fannie Mae and Freddie Mac, respectively.

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“FHFA […] became the conservator for Fannie and Freddie in the wake of the 2008 financial crisis, over the FHFA’s 2012 financing agreement with the Treasury Department,” Howe writes. “The court also agreed to weigh in on issues relating to the statute under which the FHFA became the conservator.”

Late last month, the Court ruled that the single-director structure of the CFPB — which prevents a sitting President of the United States from firing that director for reasons other than inefficiency, malfeasance or neglect — is a violation of the Constitutional doctrine of the separation of powers. While keeping the agency itself intact, the Court severed the issue of the director structure from the existence of the agency and deemed the leadership structure unconstitutional.

As noted by RMD at the time, the Court did not address whether other single director government agencies — including the Social Security Administration and FHFA — could have their leadership structures invalidated as a result of this decision. Now, that exact question as it pertains to FHFA will be debated by the nine Justices when the Court returns from its summer recess in October.

Current FHFA Director Mark Calabria has been serving in the role since April of 2019, after previously working as the chief economist for Vice President Mike Pence. The FHFA was created by the Housing and Economic Recovery Act of 2008 signed into law by President George W. Bush, and was designed to have far greater authority than its predecessor agencies in regulating the GSEs to provide liquidity and stability to the housing market.

While FHFA does not have authority over the lending limits tied to reverse mortgages, the Federal Housing Administration (FHA) has typically aligned its loan limits in the product category with the conforming loan limits on mortgages to be acquired by Fannie Mae and Freddie Mac. Changes in the reverse mortgage lending limits handed down in 2019 marked the fourth consecutive year that the lending limits matched the FHFA limits tied to higher-than-average home values.

Read the details of the USSC cases at SCOTUSblog.

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