Shareholder classes won a $612.4M jury verdict, $812M with interest, against FHFA over the 2012 “net worth sweep” of Fannie Mae and Freddie Mac profits. The D.C. Circuit unanimously affirmed the judgment on July 24, 2026, as Washington pushes to release the GSEs from conservatorship.
Latest development Jul 24, 2026
On July 24, 2026, the D.C. Circuit issued an opinion and judgment affirming the $812M judgment against FHFA, Fannie Mae, and Freddie Mac, rejecting the defendants’ arguments for reversal including that Collins v. Yellen required dismissal of the claims.
Why it matters
The last big shareholder win in the decade-long GSE litigation wars, and its fate in the D.C. Circuit lands just as the multi-hundred-billion-dollar Fannie/Freddie privatization takes shape, directly affecting how legacy shareholders fare in any release from conservatorship.
Background
In August 2012, four years into the conservatorship of Fannie Mae and Freddie Mac, FHFA and the Treasury adopted the “Third Amendment” to the senior preferred stock purchase agreements, sweeping the enterprises’ entire net worth to the government each quarter in place of a fixed 10% dividend. Junior preferred and common shareholders sued in 2013, arguing the sweep gutted any prospect of dividends or residual value. After the Supreme Court’s Collins v. Yellen narrowed the statutory attacks, the consolidated D.D.C. class action proceeded on the theory that the sweep breached the implied covenant of good faith and fair dealing in the shareholders’ contracts. A first trial ended in a hung jury in late 2022. On retrial, a jury on August 14, 2023, unanimously found for the classes and awarded $612.4M, and Judge Royce Lamberth entered final judgment of approximately $812M including prejudgment interest on March 20, 2024.
Lamberth denied FHFA’s renewed motion for judgment as a matter of law on March 14, 2025, finding “ample evidence” behind the verdict. FHFA’s appeal was argued before a three-judge D.C. Circuit panel on April 21, 2026, with the agency defending its broad conservator powers and the classes urging that Collins settled only FHFA’s authority to adopt the sweep, not whether doing so breached shareholders’ reasonable expectations. On July 24, 2026, the panel unanimously affirmed, rejecting the argument that Collins v. Yellen forecloses the implied-covenant claim, while the administration simultaneously advances plans to take the enterprises out of conservatorship, a release in which the same junior shareholders hold a direct stake.
Timeline 9 events
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AppealD.C. Circuit affirms $812M judgment against FHFA
The U.S. Court of Appeals for the D.C. Circuit affirmed the district court’s $812M judgment in favor of the Fannie Mae and Freddie Mac shareholder classes, rejecting FHFA’s arguments including that Collins v. Yellen required dismissal of the claims.
Fairholme Funds, Inc v. FHFA, No. 25-5113 (D.C. Cir. 2026)BSF's Novel Theory Delivers $812M Win For Fannie Mae And Freddie Mac Shareholders
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HearingD.C. Circuit hears FHFA’s appeal
A three-judge panel actively questions both sides on conservator powers and the reach of Collins v. Yellen.
Oral Arguments Heard in Fannie Mae Shareholders Class Action — BSF
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OrderCourt denies FHFA’s post-trial JMOL motion
Lamberth upholds the verdict, citing “ample evidence” supporting the jury’s findings.
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JudgmentFinal judgment of ~$812M entered
Judge Lamberth’s judgment adds prejudgment interest to the verdict.
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JudgmentRetrial jury awards shareholder classes $612.4M
The jury unanimously finds FHFA breached the implied covenant of good faith and fair dealing by adopting the sweep.
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OtherFirst trial ends in a hung jury
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AppealD.C. Circuit revives contract-based claims
While upholding dismissal of the statutory claims, the court of appeals lets the implied-covenant theory proceed.
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FilingShareholder class actions filed and consolidated in D.D.C
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OtherFHFA and Treasury adopt the “net worth sweep”
The Third Amendment replaces the 10% dividend with a quarterly sweep of the enterprises’ entire net worth to Treasury.