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1 (March 16, 2018)

handle is hein.crs/crsmthzzaej0001 and id is 1 raw text is: Congressional _______ Research Service ~Informing the leg Isative debate s nce 1914 Fannie & Freddie Investors Turn to Congress After S. Ct. Declines to Resurrect Their Legal Claims David H. Carpenter Legislative Attorney March 16, 2018 On February 20, 2018, the U.S. Supreme Court declined to review Perry Capital LLC v. Mnuchin, a United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit) decision that dismissed almost all of the legal claims asserted against the federal government by a consolidated group of Fannie Mae and Freddie Mac shareholders. The lawsuits focused on the 2012 amendments to the Treasury Department's 2008 agreement with the Federal Housing Finance Agency (FHFA), which governs how Fannie and Freddie (together, the companies, Government Sponsored Enterprises, or GSEs) will compensate the Treasury for providing them billions of dollars in financial assistance during the U.S. housing crisis. The 2012 amendments require the companies to transfer their entire net worth, other than small capital reserves, to the Treasury, thereby largely precluding other GSE shareholders from benefitting from any future profits of Fannie and Freddie. Although a few of the Perry Capital plaintiffs' judicial claims remain alive and other litigation is pending, the Supreme Court's denial of certiorari in Perry Capital was a major setback for the GSE shareholders' efforts to challenge the 2012 amendments through litigation. With the available routes to legal victory in the courts dwindling, some shareholders are seeking to secure similar relief legislatively, as a component of the comprehensive housing finance reform proposals currently being considered in the 115th Congress. Origins of the Litigation. Fannie Mae and Freddie Mac are congressionally chartered, shareholder- owned companies that support the U.S. housing market by buying mortgages, issuing securities backed by those mortgages, and guaranteeing against default on close to $5 trillion in mortgage debt. In July 2008, with the housing market roiling and Fannie and Freddie struggling financially, Congress passed the Housing and Economic Recovery Act of 2008 (HERA). HERA established the FHFA as the GSEs' new regulator and temporarily authorized the Treasury to make unlimited financial investments in the GSEs in order to prevent disruptions in the availability of mortgage finance. With Fannie and Freddie on the Congressional Research Service 7-5700 www.crs.gov LSB10101 CRS Legal Sidebar Prepared for Members and Committees of Conaress