The Potential Future of Housing-Finance Reform Under the Biden Administration

The future of the housing-finance giants Fannie Mae and Freddie Mac now falls onto President-elect Joe Biden’s shoulders. Both have remained under conservatorship since being bailed out during the Great Recession. The immediate future is up to the Supreme Court though, which will hear arguments on whether retaining Fannie Mae and Freddie Mac’s profits to payback debt is unconstitutional or not. Under the Trump administration, the end of the conservatorship seemed on the horizon, but Realtor.com reports that Biden may use the finance giants as a tool for helping with racial justice and economic inequality. 

On Dec. 9, the Supreme Court is set to hear oral arguments in Collins V. Mnuchin, a case that will determine whether the structure of the FHFA is constitutional. Fannie and Freddie shareholders brought the lawsuit in question. In 2012, the FHFA began sweeping the profits of the two mortgage giants to the Treasury Department to repay the funds the government used to bail them out.

The case, in many ways, mirrors one the Supreme Court has already decided. Earlier this year, the court ruled that e Consumer Financial Protection Bureau’s structure was unconstitutional. Like the CFPB, the FHFA has a single director, who as of now is appointed by the president for a five-year term, but cannot be removed by a subsequent president.

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