FHFA funding
Daisey Trust v. Federal Housing Finance Agency
Date: Jan. 2, 2026
Issue: Whether the Federal Housing Finance Agency’s funding mechanism violates the Appropriation Clause or the nondelegation doctrine of the U.S. Constitution.
Case Summary: In a unanimous decision, a Ninth Circuit panel affirmed the dismissal of a lawsuit against FHFA, ruling that its funding mechanism is constitutional.
In June 2023, Daisey Trust, Jasmine Court Trust, and Saticoy Bay LLC (Plaintiffs) sued the FHFA, alleging its funding mechanism is unconstitutional and that it lacked authority to pursue foreclosure actions affecting their properties. Plaintiffs owned Nevada properties secured by deeds of trust held by Fannie Mae or Freddie Mac and had lost state court actions seeking to quiet title. After foreclosure proceedings began, Plaintiffs argued the Housing and Economic Recovery Act of 2008 (Recovery Act) funding structure, under which the FHFA funds itself through assessments rather than annual appropriations, invalidated its role as conservator and its foreclosure authority.
Judge Andrew Gordon of the District Court of Nevada dismissed the case, ruling Plaintiffs’ constitutional claims failed on the merits. The court determined that Congress satisfied the Appropriations Clause by identifying the FHFA’s funding source and purpose, and that the Recovery Act provides an intelligible principle by limiting assessments to the agency’s reasonable costs.
On appeal, the Ninth Circuit panel affirmed. First, the panel held that Plaintiffs had Article III standing to pursue their federal claims, because the FHFA foreclosed on their properties, causing a direct injury to their property interests. The panel rejected the FHFA’s claim that Plaintiffs caused their own harm or that the enterprises alone caused the foreclosures, concluding Plaintiffs plausibly tied their injuries to the FHFA’s alleged unlawful authority and funding structure. The panel also concluded that declaratory, injunctive, and compensatory relief could remedy the alleged constitutional violations and satisfy the redressability requirement.
Even so, the panel rejected Plaintiffs’ argument that the FHFA’s funding mechanism violated the Appropriations Clause. The panel explained this Clause requires Congress to name a funding source and state how an agency may use the funds. Relying on the Supreme Court’s decision in CFPB v. Community Financial Services Association of America, the panel ruled the Recovery Act meets this requirement by funding the FHFA through assessments on Fannie Mae and Freddie Mac, while limiting those funds to the agency’s reasonable costs and expenses.
The panel also concluded the FHFA’s funding mechanism does not violate the nondelegation doctrine. The panel explained that Congress may grant agencies broad discretion as long as it provides an intelligible principle to guide that authority. The panel pointed out the Recovery Act supplies such guidance by limiting the FHFA’s assessments to amounts needed to cover the agency’s reasonable costs. Citing Supreme Court and Ninth Circuit precedent, the panel noted that courts have upheld similar statutory standards and view the intelligible-principle requirement as a modest limit. The panel also rejected Plaintiffs’ claim that the FHFA Director holds unchecked power, emphasizing the Recovery Act meaningfully restricts the Director’s discretion and does not allow open-ended funding authority.
Bottom Line: The panel held that the FHFA’s self-funding structure under the Recovery Act is constitutional.
Document: Opinion
