Rop v. FHFA Dismissed: Judge Maloney's Final Opinion Ends the Last Standing GSE Shareholder Case

Judge Paul L. Maloney just ended Rop v. FHFA. On March 11, 2026, the Western District of Michigan granted both FHFA's and Treasury's motions for judgment on the pleadings and denied the Rop Plaintiffs' motion for leave to file a second amended complaint. This is a final order. The lawsuit is over.

Full Opinion: 17-cv-00497-0121 (PDF)

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What Happened

This was one of the last shareholder lawsuits challenging the Third Amendment — the Net Worth Sweep — still alive in federal court. After years of procedural back-and-forth, the Sixth Circuit had remanded it in October 2022 for a narrow question: could the shareholders show that the unconstitutional removal restriction on the FHFA Director actually caused them financial harm?

Judge Maloney's answer: No. The complaint doesn't plead those facts, and the proposed amended complaint wouldn't fix that.

The Core Problem

The Supreme Court in Collins v. Yellen (2021) rejected the broad statutory challenges to the Net Worth Sweep. But it left open one narrow hypothetical: if the President had tried to fire an FHFA Director and was blocked by the for-cause removal restriction, shareholders might have a claim.

The Rop Plaintiffs' complaint — filed in 2017, four years before Collins — never pled those facts. And when they tried to amend, Judge Maloney found the proposed amendments futile:

"The complaint does not plead facts to establish that any President wanted to terminate a Director who enforced the Third Amendment but could not do so because of the limitation on removal. Nor does the complaint plead any facts that would permit such an inference."

The Trump Letter to Rand Paul

The Plaintiffs' best card was a November 11, 2021 letter from President Trump to Senator Rand Paul, in which Trump said:

"From the start, I would have fired former Democratic Congressman and political hack Mel Watt from his position as Director and would have ordered FHFA to release these companies from conservatorship."

The court was unimpressed:

• The letter was written after Trump left office — not contemporaneous with his first term
• It was sent privately to a Senator — not a public statement as the Collins hypothetical requires
• Most Trump Administration statements cited in the complaint were policy aspirations, not specific plans

Why It Was Doomed

Judge Maloney drove home several devastating points:

1. The same D.C. law firm filed virtually identical complaints in Collins (S.D. Tex.), Bhatti (D. Minn.), and Wazee Street (E.D. Pa.) — all rejected. The Rop complaint was no different.

2. The Fifth Circuit found that Trump's own acting Director "never questioned the propriety of the Net Worth Sweep and reaffirmed the previous administration's position." (Collins, 938 F.3d at 594)

3. The Federal Circuit noted that the President always had oversight via Treasury: "Presidents Obama and Trump could have directed the Treasury Secretary to refuse to continue the net worth sweep at any time, but did not do so." (Fairholme Funds, 26 F.4th at 1305)

4. Rule 16 failure: Plaintiffs didn't even address the good cause requirement for amending the scheduling order. The deadline had passed.

What This Means for Shareholders

The litigation path for challenging the Net Worth Sweep is now effectively closed. Every circuit that has ruled on the narrow Collins remand question has sided with the government:

• Fifth Circuit: Dismissed (Collins v. Dept. of Treasury, 83 F.4th 970, 2023)
• Eighth Circuit: Dismissed (Bhatti, 97 F.4th 225, 2024)
• Federal Circuit: Dismissed (Fairholme Funds, 26 F.4th 1274, 2022)
• Sixth Circuit / W.D. Mich.: Now dismissed (this opinion)

The courts have unanimously held that shareholders cannot connect the unconstitutional removal restriction to any concrete harm from the Third Amendment. The hypothetical the Supreme Court left open in Collins has been closed by every court that examined it.

The Path Forward Is Not in Courtrooms

This doesn't mean Fanniegate is over. It means the resolution — if it comes — will be political and administrative, not judicial. The question now is whether the current Administration will act on recapitalization through FHFA and Treasury, not whether a court will order it.

For those of us who have held preferred shares through years of litigation, this ruling is a gut punch but not a surprise. The writing has been on the wall since Collins. The Supreme Court gave shareholders a theoretical crack in the door and every lower court has slammed it shut.

The case for Fannie and Freddie recapitalization remains strong on the merits. The companies are profitable. They have been for years. The Net Worth Sweep extracted over $300 billion. The question was always whether the system would acknowledge what happened, and this judge — like every judge before him — decided it wouldn't be the courts that do it.

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Case: Rop v. Federal Housing Finance Agency, No. 1:17-cv-497 (W.D. Mich.) Judge: Hon. Paul L. Maloney Filed: March 11, 2026 Result: Defendants' motions for judgment on the pleadings GRANTED. Plaintiffs' motion for leave to amend DENIED. Final order.

Download the full opinion (PDF)

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