The Federal Housing Finance Agency (FHFA) filed “a motion to dismiss” in the U.S. District Court in Florida on October 16, 2013 regarding the lawsuit by NLIHC and others that seeks to require the FHFA to permit Fannie Mae and Freddie Mac to make payments to the National Housing Trust Fund. NLIHC, the other plaintiffs, and our attorneys expected that a motion to dismiss with the rationale offered by FHFA would be the response. The attorneys, Charles Elsesser of Florida Legal Services and pro bono attorneys of the firm Holland & Knight, are confident that the case will go forward.
NLIHC, the Right to the City Alliance, and three individual plaintiffs sued FHFA on July 9 asserting that the FHFA Director should lift the suspension on payments to the NHTF imposed by his predecessor when Fannie Mae and Freddie Mac were taken into conservatorship in the fall of 2008 (see Memo, 7/12). The basis for the lawsuit was the requirement in the Housing and Economic Recovery Act (HERA) of 2008 that Fannie and Freddie fund the NHTF, and the fact that they are once again profitable and no longer in financial jeopardy.
The motion to dismiss claims the Court does not have jurisdiction over the suit for two reasons. The first is that the plaintiffs lack standing. The motion asserts that the injury claimed by the individual plaintiffs that they lack affordable housing that could have been provided by the NHTF cannot be reasonably traced to actions by the FHFA. Further, NLIHC and the Right to the City Alliance are said to lack standing because neither develops affordable housing.
The second reason that FHFA says the Court lacks jurisdiction is the assertion that the FHFA Director, as the conservator of Fannie Mae and Freddie Mac, is immune from any judicial challenges and that Congress gave the Director sole discretion to determine Fannie and Freddie’s financial viability.
Finally, FHFA asserts that even if these two threshold questions were answered in favor of the plaintiffs, the plaintiffs could not prevail because the “Enterprises’ (Fannie and Freddie) continued financial instability is incontrovertible.”
The next step in the lawsuit is for U.S. District Court Judge Marcia Cooke to rule on FHFA’s motion to dismiss, which is expected to be in late 2013 or early 2014. If the case then proceeds, the next decision point will be in July 2014.