Samuels v. Federal Housing Finance Agency

54 F. Supp. 3d 1328, 2014 U.S. Dist. LEXIS 152391, 2014 WL 5368791
CourtDistrict Court, S.D. Florida
DecidedSeptember 29, 2014
DocketCase No. 13-22399-Civ
StatusPublished

This text of 54 F. Supp. 3d 1328 (Samuels v. Federal Housing Finance Agency) is published on Counsel Stack Legal Research, covering District Court, S.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Samuels v. Federal Housing Finance Agency, 54 F. Supp. 3d 1328, 2014 U.S. Dist. LEXIS 152391, 2014 WL 5368791 (S.D. Fla. 2014).

Opinion

[1330]*1330 ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT

MARCIA G. COOKE, District Judge.

Plaintiffs Angela Samuels, Rossana Torres, Danielle Stelluto, National Low Income Housing Coalition, and Right to the City Alliance (collectively “Plaintiffs”) filed their First Amended Complaint for Declaratory and Injunctive Relief (“First Amended Complaint”) (ECF No. 30) against Defendants Federal Housing Finance Agency and Edward DeMarco (collectively “Defendants”) seeking the following three forms of relief: (1) that this Court vacate and set aside the Federal Housing Finance Agency’s (FHFA) decision to “indefinitely”1 suspend payments to the Housing Trust Fund as null and void; (2) that this Court declare that the FHFA unreasonably withheld or delayed review of its decision to suspend the Housing Trust Fund payments, and require the FHFA to undertake an immediate review of its decision; and (3) that this Court order the FHFA to instruct Fannie Mae and Freddie Mac to make all suspended payments into the Housing Trust Fund as if the FHFA’s decision to indefinitely suspend payments never occurred. See First Am. Compl. at 30-31.

Defendants challenge this Court’s subject-matter jurisdiction over this dispute arguing that Plaintiffs lack standing because their “alleged injury is exceedingly remote from the actions they challenge, making it highly speculative that the Court could redress it,” and because “the decisions whether and, if so, when to revisit the suspension of Housing Trust payments and (assuming such reconsideration were to take place) whether to terminate the suspension fall within the Director’s unre-viewable discretion to determine whether such payments would contribute to the Enterprises’ continued financial instability.” Mot. Dismiss at 2.1 agree.

I. BACKGROUND2

Angela Samuels, Rossana Torres, and Danielle Stelluto (collectively, “Individual Plaintiffs”) are extremely low-income tenants without any permanent housing. First Am. Compl. ¶¶ 1, 7. Plaintiff Danielle Stelluto has been living in a New York City homeless shelter with her two children. First Am. Compl. ¶¶ 31, 38. Plaintiff Angela Samuels is living doubled up with a family member. Plaintiff Rossana Torres has been forced to live in temporary arrangements with relatives. First Am. Compl. ¶¶ 8-10, 15, 17. All have been searching diligently for affordable housing and have been unable to find any. First Am. Compl. ¶¶ 18, 28, 36. Plaintiffs National Low Income Housing Coalition and Right to the City Alliance (“Organizational Plaintiffs”), are non-profit membership corporations composed of individuals, many of whom are extremely low income individuals in need of affordable housing, and other local or statewide organizations, dedicated to expanding the supply of affordable housing to extremely low-income families. First Am. Compl. ¶¶ 51-53, 57-61.

Defendant Federal Housing Finance Agency (FHFA) is the federal agency, created by Congress on July 30, 2008, through the Housing and Economic Recov[1331]*1331ery Act of 2008, P.L. 110-289 (HERA). FHFA is charged with oversight of the secondary mortgage market including Fannie Mae and Freddie Mac. Shortly after the passage of HERA, Fannie Mae and Freddie Mac were placed into conservator-ship and FHFA was named as the conservator. First Am. Compl. ¶ 65. Defendant Edward DeMarco is the Acting Director of FHFA and, as such, is charged with the administration and enforcement of all functions, powers and duties of FHFA. As the Director, Defendant DeMarco has the statutory authority, pursuant to 12 U.S.C. § 4567, to make the necessary findings to suspend the statutorily required payments from Fannie Mae and Freddie Mac to the Housing Trust Fund. First Am. Compl. ¶ 66.

Federal Statute 28 U.S.C. § 1338 requires the Secretary of Housing and Urban Development (HUD) to establish, by regulation, a formula to distribute amounts made available under this .subsection to each state to provide affordable housing to extremely low- and very low-income households. The statute further provides criteria for that allocation. Pursuant to the command of 28 U.S.C. § 1338, the Secretary of HUD proposed regulations for the administration of the Housing Trust Fund and the distribution of its funding. 75 Fed.Reg. 66978-01, 2010 WL 4255283. First Am. Compl. ¶¶ 44-45. In 2008, Congress created the Housing Trust Fund, as part of the Housing and Economic Recovery Act of 2008 (HERA), P.L. 110 -289 (July 30, 2008). First Am. Compl. ¶ 79. Congress intended the national Housing Trust Fund to be funded with a percentage of the annual business of Fannie Mae and Freddie Mac. The Housing and Economic Recovery Act of 2008 funded the Housing Trust Fund through contributions mandated by Section 1131(b), which amended Section 1337 of the Federal Housing Financial Safety and Soundness Act of 1992, 12 U.S.C. § 4567(a). First Am. Compl. ¶ 80.

In the fall of 2008, Fannie Mae and Freddie Mac were placed in conservator-ship and the Defendant FHFA was named as the conservator. When Fannie Mae and Freddie Mac were first placed in con-servatorship they received a substantial infusión of capital from the U.S. Treasury through the Treasury’s purchase of preferred stock, for which the Treasury received a yearly dividend of 10 percent. Overall, the U.S. Treasury has invested approximately $116 billion in Fannie. Mae and $72 billion in Freddie Mac. Fannie Mae and Freddie Mac have made all yearly dividend payments and have not accessed any additional capital infusions since the second quarter of 2012. Importantly for the issues presented, in the fall of 2008, the Federal Defendants instructed Fannie Mae and Freddie Mac to suspend all payments to the Housing Trust Fund pursuant to 12 U.S.C. § 4567(b)3. Since that time, despite repeated requests, the Federal Defendants have failed and refused to revisit or review their suspension of payments. First Am. Compl. 84-85. On or about April 15, 2013 Plaintiffs National Low Income Housing Coalition and Right to the City Alliance wrote to the Federal Defendants and demanded that the Federal Defendants review their initial determination to suspend the statutorily [1332]*1332required payments to the Housing Trust Fund. Federal Defendants failed and refused to acknowledge or respond to that request. First Am. Compl. 88.

Counsel for Plaintiffs appealed the Defendants’ refusal to respond and on July 8, 2013, Defendants provided two letters instructing Fannie Mae and Freddie Mac to suspend allocations pursuant to Section 1337 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended. As stated in the letters, the suspension was based on findings (a) that the amount of the contribution would further contribute to the financial instability of the Enterprises; and (b) that, while FHFA has suspended capital classifications, it was anticipated that the Enterprises would be required to draw funds from the U.S. Treasury to maintain a positive net worth. First Am. Compl. 90.

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Bluebook (online)
54 F. Supp. 3d 1328, 2014 U.S. Dist. LEXIS 152391, 2014 WL 5368791, Counsel Stack Legal Research, https://law.counselstack.com/opinion/samuels-v-federal-housing-finance-agency-flsd-2014.