After the Great Depression resulted in the default of half of the nation’s real estate mortgages, Congress gave federal housing agencies the authority to provide mortgage insurance for multi-family properties through the National Housing Act of 1934. Since then, the Federal Housing Administration (FHA), now a component of the Department of Housing and Urban Development (HUD), has provided insurance for mortgages of multi-family housing, which helps borrowers secure mortgages with more attractive terms. In exchange for these benefits, mortgagors enter into Regulatory Agreements with HUD, under which the mortgagor agrees to comply with HUD’s requirements. One requirement is that mortgagors limit their distribution of profits from the mortgaged property, to ensure sufficient funds will be available to pay liabilities and insurance premiums. If a mortgagor intentionally violates this requirement, HUD can assess civil monetary penalties to ensure compliance.

Frank Sinito is the owner of over two hundred HUD-insured or HUD-assisted multifamily properties across the country through a network of management companies, including Millennia Housing Management. In 2023, HUD found that his companies made 115 unauthorized distributions—at least 75 of which went into Sinito’s personal bank account. These unauthorized transfers weakened the financial condition of the properties and risked delaying maintenance projects. Ultimately, HUD expelled Millennia Housing Management and Sinito from the insurance program and sought civil monetary penalties. Sinito and his management companies brought an action in the federal district court for the Northern District of Ohio alleging that the Seventh Amendment, which guarantees the right to a jury trial, would be violated if HUD’s administrative proceedings were allowed to continue. The court below refused to enjoin the proceedings and dismissed the claim, and the plaintiffs appealed to the Sixth Circuit. In December 2025, CAC filed an amicus brief in support of HUD.

In SEC v. Jarkesy, the Supreme Court held that when the Securities Exchange Commission (SEC) seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial. But the Court made clear that there are “some contexts” in which what the Court has called the “public rights doctrine” applies, and in those contexts, the government may seek traditional legal remedies and civil penalties in administrative tribunals. Our brief explains why the public rights doctrine applies here.

As the Court explained in Jarkesy, “public rights” concern matters that historically could have been determined exclusively by the executive and legislative branches. Put another way, the public rights doctrine applies when the government’s power in an area is so total that no party has a “vested right” to act in that area without the government’s approval.

HUD’s supervisory powers stem from the relationship between the federal government and the housing developers who receive federally-insured mortgages. The FHA insurance scheme distributes valuable government benefits to private industry to encourage home construction, and the federal government has complete authority to determine who receives the benefit of participating in this program. The lawmakers who passed the National Housing Act knew that the insurance program would be a boon to developers. Indeed, critics of the program warned that Congress was going out on a limb on behalf of private industry. Its proponents replied that insured mortgages would be subject to regulation to protect the government’s investment. Indeed, Congress gave HUD the authority to assess civil penalties because the agency needed a way to protect low-income tenants—as well as the assets in the FHA insurance fund—without foreclosing on the mortgage or excluding developers from the program entirely. Moreover, it is completely up to developers to decide whether to accept federally-insured mortgages. Their voluntary participation in the HUD insurance program underscores the fact that this is an area in which no vested rights are involved.

The history of the multi-family mortgage insurance program makes clear that the public rights doctrine applies, and the Sixth Circuit should affirm.