Federal Housing Finance Agency

History

The law establishing the FHFA is the Federal Housing Finance Regulatory Reform Act of 2008, which is Division A of the larger Housing and Economic Recovery Act of 2008, Public Law 110-289, signed on July 30, 2008 by President George W. Bush. One year after the law was signed, the OFHEO and the FHFB went out of existence. All existing regulations, orders and decisions of OFHEO and the Finance Board remain in effect until modified or superseded.

On the day of the law's signing, former Director James Lockhart stated:

FHFA director Lockhart transmitted a "notice of establishment," for publication in the Federal Register on September 4, 2008. The notice formally announced the agency's existence and authority to act.

Conservatorships

Main article: Federal takeover of Fannie Mae and Freddie Mac

On September 7, 2008, FHFA director Lockhart announced he had put Fannie Mae and Freddie Mac under the conservatorship of the FHFA. The action was "one of the most sweeping government interventions in private financial markets in decades". U.S. Treasury Secretary Henry M. Paulson, appearing at the same press conference, stated that placing the two GSEs into conservatorship was a decision he fully supported, and said that he advised "that conservatorship was the only form in which I would commit taxpayer money to the GSEs." He further said that "I attribute the need for today's action primarily to the inherent conflict and flawed business model embedded in the GSE structure, and to the ongoing housing correction."

In the announcement, Lockhart indicated the following items in the plan of action for the conservatorship:

1. On September 8, 2008, the first day of the conservatorship, business will be conducted normally, with stronger backing for the holders of Mortgage Backed Securities (MBS), senior debt and subordinated debt.
2. The Enterprises will be allowed to grow their guarantee MBS books without limits and continue to purchase replacement securities for their portfolios, about $20 billion per month, without capital constraints.
3. As the conservator, the FHFA will assume the power of the Board and management.
4. The present CEOs have been dismissed, but will stay on to help with the transition.
5. Appointed as CEOs are Herb Allison, for Fannie Mae and David M. Moffett for Freddie Mac. Allison is former Vice Chairman of Merrill Lynch and for the last eight years chairman of TIAA-CREF. Moffett is the former Vice Chairman and CFO of US Bancorp. Their compensation will be significantly lower than the outgoing CEOs. They will be joined by equally strong non-executive chairmen.
6. Other management action will be very limited. The new CEOs agreed it is important to work with the current management teams and employees to encourage them to stay and to continue to make important improvements to the Enterprises.
7. To conserve over $2 billion annually in capital the common stock and preferred stock dividends will be eliminated, but the common and all preferred stocks will continue to remain outstanding. Subordinated debt interest and principal payments will continue to be made.
8. All political activities, including all lobbying, will be halted immediately. Charitable activities will be reviewed.
9. There will be financing and investing relationship with the U.S. Treasury via three different financing facilities, to provide critically needed support to Freddie Mac and Fannie Mae and the liquidity of the mortgage market. One of the three facilities is a secured liquidity facility which will be not only for Fannie Mae and Freddie Mac, and also for the 12 Federal Home Loan Banks that FHFA also regulates.

Suits against financial institutions

The FHFA in 2011 filed suit first against UBS then against 17 other financial institutions accusing them of misrepresenting about $200 billion in mortgage-backed securities sold to Fannie Mae and Freddie Mac. The suits, some of which name individual defendants, allege a variety of violations of federal securities law and common law and paint "a damning portrait of the excesses of the housing bubble." The suits seek a variety of damages and civil penalties. UBS Agrees to Pay $1.435 Billion to Resolve Claims That It Made Misrepresentations in the Sale of Residential Mortgage-Backed Securities

FHFA settlements for fraudulent sales by PLS to Fannie Mae and Freddie Mac

The Federal Housing Finance Agency initiated litigation against 18 financial institutions involving allegations of securities law violations and, in some instances, fraud in the sale of private-label securities (PLS) to Fannie Mae and Freddie Mac.

Below is a list of the cases, with amounts of any settlements reached in 2013 and 2014.

Non-Litigation PLS Settlements Wells Fargo Bank, N.A. $335.23 million

Leadership

Upon Lockhart's departure, Edward DeMarco was appointed Acting Director of FHFA on August 25, 2009.

On May 1, 2013, President Barack Obama nominated Mel Watt as the next FHFA head. After Democrats eliminated rules allowing filibusters on executive branch nominations, the U.S. Senate confirmed Watt on December 10, 2013.

On December 21, 2018, President Donald Trump designated Comptroller of the currency Joseph Otting to be Acting Director of FHFA upon completion of Director Watt's term, effective January 7, 2019.

In April 2019, Mark A. Calabria was confirmed to a five year term as director. At the time of his confirmation, the chair of the Senate Banking Committee said that Calabria had committed to working with the Senate toward ending the conservatorship over Fannie Mae and Freddie Mac.

In the Supreme Court case Collins v. Yellen, the Supreme Court ruled that, as they had in Seila Law LLC v. Consumer Financial Protection Bureau for the Consumer Financial Protection Bureau, that the inability for the President to terminate the FHFA director beyond "for cause" was unconstitutional, but otherwise left the agency's power as is. President Biden replaced Calabria with Sandra L. Thompson as Acting Director, who is expected to end Calabria's policy of phasing out the conservatorship.

Inspector General

Brian M. Tomney was nominated by President Joe Biden and confirmed by the U.S. Senate to serve as Inspector General for the Federal Housing Finance Agency. Sworn into office on March 14, 2022, Tomney is the third Senate confirmed Inspector General for FHFA.

Laura S. Wertheimer was nominated as Inspector General of the Federal Housing Finance Agency by President Barack Obama and confirmed by the U.S. Senate on September 17, 2015. On June 29, 2021, Wertheimer announced she would be leaving the position on July 30, 2021. This followed calls from Republican Senators Chuck Grassley and Ron Johnson for her removal in the preceding weeks, and a critical CIGIE report released on April 29, 2021.

References

References

1. [http://www.gpo.gov/fdsys/pkg/PLAW-110publ289/pdf/PLAW-110publ289.pdf Housing and Economic Recovery Act of 2008] {{Webarchive. link. (2013-10-19 (PDF))
2. (March 14, 2025). "William J. Pulte Sworn In as 5th Director of U.S. Federal Housing (FHFA)".
3. link. (2010-06-11 .)
4. (2008-08-06). "10-Q, August 6, 2008". Freddie Mac.
5. "No. 17-20364".
6. (23 June 2021). "Supreme Court finds FHFA structure unconstitutional". HW Media, LLC.
7. HR 3221, signed into law as Public Law 110-289: ''A bill to provide needed housing reform and for other purposes.''
   Access to Legislative History: Library of Congress: [http://thomas.loc.gov/cgi-bin/bdquery/z?d110:h.r.03221: A bill to provide needed housing reform and for other purposes.] {{Webarchive. link. (2008-09-18
   White House pre-signing statement: [https://georgewbush-whitehouse.archives.gov/omb/legislative/sap/110-2/saphr3221-h.pdf Statement of Administration Policy: H.R. 3221 – Housing and Economic Recovery Act of 2008] {{webarchive). link. (2020-11-30 (July 23, 2008). Executive office of the President, Office of Management and Budget, Washington DC.)
8. [http://www.ofheo.gov/media/news%20releases/FHFARegisterNotice9408.pdf FHFA "Notice of establishment sent to the Fdderal Register] {{Webarchive. link. (2008-09-09 . (Press Release) (September 4. 2008) Federal Housing Finance Agency. (Summarizing the Federal Register transmittal.))
9. [http://www.ofheo.gov/media/news%20releases/FHFARegisterNotice9408.pdf Establishment of a new independent agency] {{Webarchive. link. (2008-09-09 Federal Housing Finance Agency. (August 30, 2008). (Signed by James B. Lockhart III, Director, FHFA) -- The notice as transmitted to the Federal Register.)
10. (2023-08-14). "Eastern District of New York {{!}} UBS Agrees to Pay $1.435 Billion to Resolve Claims That It Made Misrepresentations in the Sale of Residential Mortgage-Backed Securities {{!}} United States Department of Justice".
11. FHFA [http://www.fhfa.gov/Media/PublicAffairs/Pages/FHFAs-Update-on-Private-Label-Securities-Actions.aspx] {{Webarchive. link. (2015-03-22 Press release)
12. (4 December 2012). "FHFA lawsuits". [[Reuters]].
13. Justice department [https://www.justice.gov/iso/opa/resources/61620131119191331856335.pdf] {{Webarchive. link. (2020-10-28 settlement agreement)
14. (23 January 2013). "GE settles".
15. JP Morgan Chase settles [https://www.cnbc.com/2013/10/25/4-bln-jpmorganfhfa-deal-expected-as-soon-as-friday-justice-dept-deal-next-week-dow-jones.html] CNBC
16. "Countrywide settles".
17. link. (2018-10-10 NY times)
18. (22 August 2014). "Goldman settles". [[The Wall Street Journal]].
19. Wells Fargo settlement [https://www.wsj.com/articles/SB10001424052702304448204579181732009850594] {{Webarchive. link. (2016-01-24 Wall street journal)
20. (December 10, 2012). "FHFA's DeMarco to be Replaced Early Next Year: WSJ". Mortgage Mews Daily.
21. Hopkins, Cheyenne. (May 1, 2013). "Obama Said to Choose Watt to Lead Fannie Mae Regulator". Bloomberg.
22. Puzzanghera, Jim. (May 1, 2013). "Obama to nominate Democratic Rep. Mel Watt to head housing agency". Los Angeles Times.
23. (December 10, 2013). "Senate confirms Rep. Mel Watt as Fannie Mae, Freddie Mac regulator". [[Los Angeles Times]].
24. [https://www.occ.gov/news-issuances/news-releases/2018/nr-occ-2018-140.html President Trump Names Joseph M. Otting Acting Director of the Federal Housing Finance Agency] {{Webarchive. link. (2018-12-28 . NR 2017-140. December 21, 2018)
25. O'Donnell, Katy. (April 4, 2019). "Senate confirms Calabria to lead housing finance overhaul". [[Politico]].
26. (June 23, 2021). "U.S. Supreme Court bolsters presidential power over housing finance agency". [[CNBC]].
27. (29 June 2021). "Embattled Housing Finance Agency IG Steps Down".
28. (6 May 2021). "Senators Call for Removal of FHFA Inspector General".
29. (28 April 2021). "Report finds federal housing agency official 'abused her authority'". [[The Hill (newspaper).
30. (Jul 27, 2011). "FHFA Sues UBS to Recover Losses to Fannie Mae and Freddie Mac". FHFA.
31. (Sep 2, 2011). "FHFA Sues 17 Firms to Recover Losses to Fannie Mae and Freddie Mac". FHFA.
32. (Sep 3, 2011). "Federal Regulators Sue Big Banks Over Mortgages". [[The New York Times]].
33. Leonard, Andrew. (Sep 6, 2011). "The bungled politics of bank bashing". [[Salon.com.
34. Salmon, Felix. (Sep 2, 2011). "The FHFA lawsuit league table". [[Reuters]].
35. Stern, Mark Joseph. (2021-06-24). "A Scheme to Blow Up the Housing Market Backfired Spectacularly at the Supreme Court".
36. (September 7, 2008). "Treasury and Federal Housing Finance Agency Action to Protect Financial Markets and Taxpayers". U.S. Dept of Treasury.
37. (June 23, 2021). "White House replaces regulator overseeing U.S. mortgage giants following Supreme Court ruling". [[The Washington Post]].
38. Goldfarb, Zachary A.. (2008-09-07). "Treasury to Rescue Fannie and Freddie: Regulators Seek to Keep Firms' Troubles From Setting Off Wave of Bank Failures". [[The Washington Post]].