The ruling keeps the agency's oversight of Fannie Mae and Freddie Mac intact
A constitutional attack on the Federal Housing Finance Agency's (FHFA) funding authority has failed, with the Ninth Circuit affirming the agency's power over Fannie and Freddie.
The Federal Housing Finance Agency just cleared a legal hurdle that, had it gone the other way, could have thrown a wrench into the machinery of federal mortgage oversight.
In a decision filed January 2, 2026, the United States Court of Appeals for the Ninth Circuit rejected a challenge to the way FHFA funds itself — through assessments on Fannie Mae and Freddie Mac rather than congressional appropriations. The ruling in Daisey Trust v. Federal Housing Finance Agency affirms that this funding structure, established by the Housing and Economic Recovery Act of 2008, passes constitutional muster.
The case has its roots in Nevada real estate. Three plaintiffs — Daisey Trust, Cape Jasmine Court Trust, and Saticoy Bay LLC, Series 10007 Liberty View — purchased properties between 2012 and 2013 that came with existing liens held by Fannie Mae or Freddie Mac. When their attempts to wipe out those liens in state court failed, the properties eventually went to foreclosure between 2022 and 2024.
Rather than challenge the foreclosures directly, the plaintiffs took aim at FHFA itself. Their argument was creative, if ultimately unsuccessful: because the Recovery Act sets no hard cap on how much FHFA can collect from the entities it regulates, they claimed Congress had handed over too much power without proper guardrails. They raised two constitutional objections — one under the Appropriations Clause, another under the nondelegation doctrine.
The Ninth Circuit was not persuaded.
On the appropriations question, the court leaned heavily on the Supreme Court's 2024 decision in Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited. That ruling established a straightforward test: Congress just needs to identify where the money comes from and what it can be spent on. FHFA's setup checks both boxes — assessments from Fannie and Freddie, used for reasonable agency costs and expenses.
As for the lack of a spending cap, the court pointed out that Congress has wide latitude in how it structures funding. Open-ended arrangements are nothing new. The Customs Service and the Post Office operated under similar models back in the founding era.
The nondelegation argument fared no better. The court found that limiting FHFA to collecting amounts "sufficient to provide for reasonable costs" gives the agency enough direction to satisfy constitutional requirements. That language, the court noted, is no vaguer than standards the Supreme Court has approved many times before.
The plaintiffs asked for another chance to amend their complaint. The court said no — further amendments would be futile.
For mortgage professionals watching from the sidelines, the takeaway is reassuring. FHFA's authority over the government-sponsored enterprises remains intact, and the legal foundation supporting that oversight is as solid as ever. The status quo holds.
