Following the March 1, 2026 extended effective date of FinCEN’s 2024 Final Rule mandating expansive reporting regarding “non-financed transfers” of residential real property (“Rule”), UTA has continued to monitor the impacts of the Rule and communicate with FinCEN regarding needed clarifications about the Rule as applied to non-judicial foreclosures and deeds in lieu of foreclosure nationwide. On March 19, 2026, the United States District Court for the Eastern District of Texas in Flowers Title Companies, LLC v Bessent Case No. 6:25-cv-127-JDK (E.D. Tex. Mar. 19, 2026) ruled to “vacate and set aside” the sweeping new reporting requirements in the Rule. Flowers Title Companies asserted that FinCEN exceeded statutory authority and violated the Administrative Procedures Act in promulgating the Rule. The Court found that although 31 U.S.C. section 5318(g)(1) empowers the Secretary of the Treasury to “require any financial institution, and any director, officer, employee, or agent of any financial institution, to report any suspicious transaction relevant to a possible violation of law or regulation,” this section “does not give FinCEN the authority to regulate all transactions—but only those transactions that tend to arouse the belief that something is wrong.” The court also found that while Section 5318(a)(2) allows FinCEN to “require institutions to maintain procedures, including maintaining collection and reporting procedures,” this section does not authorize the affirmative information collection and reporting requirements in the Rule regarding non-financed transactions. By granting vacatur of the Rule, the Court acted to “re-establish the status quo absent the unlawful agency action.”
Based on the decision, the Rule is not enforceable by FinCEN at this time. The Secretary is expected to file an appeal of the decision to the Fifth Circuit Court of Appeals on an expedited basis, which may include a request for stay of the vacatur pending appeal. Processing by the Fifth Circuit (and potentially to the Supreme Court ) will likely take several weeks or months, and we will continue to keep you informed of the progress.
It should be noted that although another recent case, Fidelity Nat’l Fin., Inc. v. Bessent, No. 3:25-CV-554-WWB-SJH, 2025 WL 4477503 (Dec. 9, 2025) (M.D. Fla. Feb. 19, 2026) that challenged that Rule reached a different result, the Texas case purports to have vacated the Rule nationwide so would control pending any reversal by the Fifth Circuit or the U.S. Supreme Court. In Fidelity, the Magistrate Judge recommended denying the plaintiff’s motion for summary judgment and granting FinCEN’s cross-motion for summary judgment, finding that FinCEN acted within its statutory authority and rejecting the plaintiff’s constitutional challenges to the Final Rule. The district judge later adopted the recommendation [2026 WL 472350 (Feb. 19, 2026)]. Although the Texas court’s opinion recognized that the court in Fidelity had upheld the Rule, it rejected those arguments so, for now at least, Flowers controls.
FinCEN has posted the following message on its website:
In light of a federal court decision, reporting persons are not currently required to file real estate reports with FinCEN and are not subject to liability if they fail to do so while the order remains in force.
If you have questions about how these decisions and the Rule impact your loan servicing, foreclosure and REO management operations, you may reach UTA’s President Edward Treder at edwardt@bdfgroup.com or UTA’s counsel, Michelle Mierzwa at mmierzwa@wrightlegal.net. Ed and Michelle have acted as the points of contact with FinCEN for UTA and the industry coalition seeking clarification of the Rule’s impact on the default servicing and foreclosure industry.
Read FinCEN message here.