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A directive issued by the Federal Housing Finance Agency (“FHFA”) to Fannie Mae and Freddie Mac prohibiting the enterprises from purchasing assets FHFA deems risky is an unreviewable action by FHFA as a conservator and not as a regulator, thus formal rulemaking proceedings, including notice-and-comment are not required.

The Federal Housing Finance Agency (“FHFA”) is both regulator and conservator of Freddie Mac and Fannie Mae (“the Enterprises”). The Enterprises are government-sponsored entities that purchase and securitize residential mortgages. FHFA issued a directive, as conservator, that the Enterprises were no long allowed to buy mortgages on properties encumbered by liens made under so-called property-assessed clean energy (“PACE”) programs, which provide a super-priority to any lien above that of other creditors. Entities with PACE liens sought a preliminary injunction to prevent the directive from going into effect, arguing such a directive was actually a rule under the Administrative Procedure Act (“APA”) and thus subject to notice-and-comment. FHFA argued the directive was taken pursuant to its authority as conservator to “preserve and conserve the assets and property of the Enterprises.” Actions taken as a conservator are not subject to judicial review pursuant to 12 U.S.C. § 4617(f). The district court granted summary judgment against FHFA finding that FHFA failed to comply with the APA’s formal rulemaking requirements, and entered an order requiring compliance. The Ninth Circuit reversed the district court and joined the Second and Eleventh Circuits in holding that §4617(f) places directives issued by FHFA outside the scope of the courts’ review. The panel determined that the directive was within the power granted to FHFA as a conservator since the “decision not to buy assets that FHFA deems risky is within its power to ‘carry on’ the Enterprises’ business and to ‘preserve and conserve the assets and property of the Enterprises.’” FHFA’s decision was therefore one of a conservator, not a regulator. The panel thus determined neither the Court nor the district courts have jurisdiction over the claims against FHFA in this matter. VACATED and DISMISSED.