Federal Housing Finance Agency (FHFA) Director Mark Calabria is out of a job following a U.S. Supreme Court ruling that granted President Biden the ability to give him the boot.
The Wednesday morning ruling found that the leadership structure of the overseer of Fannie Mae and Freddie Mac violates the constitution under the separation of powers doctrine because the agency’s lone director is insufficiently accountable to the President. As a result, the court ruled that the director of the FHFA can in fact be removed by the U.S. President.
President Biden wasted little time putting newly gained power to use after a White House Official reportedly confirmed that Calabria would be ousted.
The Supreme Court ruling on the FHFA’s leadership structure and the subsequent removal of Calabria has already gained attention from leaders in the real estate industry.
“MBA recognizes and appreciates the impact of the Supreme Court’s decision in Collins v. Yellen as FHFA plays a critical role regulating entities that ensure liquid markets for single-family and multifamily mortgages, said Bob Broeksmit, CMB, president and CEO of the Mortgage Bankers Association in a prepared statement. “We expect President Biden will move quickly to appoint a successor, and we look forward to working collaboratively with the administration, FHFA, and other stakeholders to ensure those markets function well for lenders and the American consumers they serve.”
The National Association of REALTORS® (NAR) also issued a statement in response to the court ruling, expressing concerns over FHFA policy changes.
“NAR has appreciated Director Calabria’s willingness to address complex issues and advance GSE reform conversations over the past two years,” said NAR president Charlie Oppler in the written statement. “While the agency has also worked tirelessly to uphold a safe, stable mortgage market throughout the pandemic, NAR has concerns that recent FHFA policy changes could jeopardize the availability of mortgage credit in the future.”
Congress created the FHFA as part of the Housing and Economic Recovery Act of 2008 (Recovery Act) following the bubble burst. For more than a decade, the agency has regulated Fannie Mae and Freddie Mac.
A group of the companies’ shareholders challenged the FHFA’s leadership structure, claiming it violates the separation of powers because the Agency is led by a single Director, “removable by the President only for cause.”
Wednesday’s ruling allowed the president to remove the director of the FHFA at any time.
The court sent the case back to lower courts on whether the shareholders can obtain compensation based on their constitutional claims, according to an opinion authored by Justice Samuel Alito and featured in the case filing.
“We conclude that the FHFA’s structure violates the separation of powers, and we remand for further proceedings to determine what remedy if any, the shareholders are entitled to receive on their constitutional claim,” Alito wrote.
This is a developing story.
Jordan Grice is RISMedia’s associate content editor. Email him your real estate news to jgrice@rismedia.com.
