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U.S. Supreme Court Decides Regulator of Housing Giants Fannie Mae and Freddie Mac can be Removed “At Will” by the President

Wednesday, June 23, 2021

SCOTUS rules that the FHFA leadership structure is unconstitutional

WASHINGTON, D.C. – This morning, the Supreme Court of the United States (SCOTUS) issued a decision affecting housing giants Fannie Mae and Freddie Mac, government-sponsored enterprises (GSEs) that financially back every other mortgage in America. The SCOTUS decided, in Collins v. Yellen, that the director of the Federal Housing Finance Agency (FHFA), which regulates and serves as the conservator of the GSEs, can be fired “at will” by the President.

Center for Responsible Lending Senior Policy Counsel Melissa Stegman issued the following statement:

With this Supreme Court decision issued, the White House should now select a director for this key housing agency who will fulfill the Administration’s pledges for racial and economic justice.

Fannie Mae and Freddie Mac are statutorily obligated to serve the entire market and ensure that underserved borrowers, including Black, Latino, Asian American, Pacific Islander, Native American homebuyers, first time homebuyers, and lower wealth families, have access to responsible forms of mortgage credit and to affordable rental housing. The GSEs, especially in recent years, have woefully unfulfilled this obligation. It is essential for the FHFA to require Fannie Mae and Freddie Mac to fundamentally change their approach by equitably expanding opportunities for sustainable homeownership and affordable rental housing to more Americans.

Additional Background
In 2019, 4.8% of Fannie Mae and 3.6% of Freddie Mac loan purchases were from Black borrowers, and 12.1% and 9.4% were from Latino borrowers. These numbers lag behind the Black and Latino share of the U.S. population, which are around 13.4% and 18.5% respectively.

Black homeownership today is at levels similar to when the Fair Housing Act was passed in 1968. Additionally, the gap between white and Black homeownership rates today is the largest it has been since 1890.

The case before the Supreme Court was on whether the Federal Housing Finance Agency having a single director who was removable only “for cause” violated the separation of powers – mirroring a previous SCOTUS case over the leadership structure of the Consumer Financial Protection Bureau (CFPB). This FHFA case was brought by shareholders of the GSEs who claim that the federal government unconstitutionally took over their stakes in the companies.


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