Key facts
- The FHFA has requested Congress grant it the power to directly sue for mortgage fraud.
- FHFA Director Bill Pulte has referred prominent Democrats, including NY AG Letitia James and Fed Governor Lisa Cook, for mortgage fraud.
- Charges against James were dismissed by a federal judge.
- Investigations are ongoing for Schiff and Cook.
- Lawmakers accuse Pulte of "weaponizing" the FHFA against political opponents of President Trump.
- The GAO will investigate Pulte's actions regarding mortgage fraud cases against Democrats.
The Federal Housing Finance Agency (FHFA) is seeking new authority from Congress to directly file civil lawsuits related to mortgage fraud. In its latest Annual Report to Congress, the agency proposed either obtaining the power to sue in state or federal courts, similar to Fannie Mae and Freddie Mac, or the creation of a new federal law against mortgage fraud that the FHFA could enforce.
This request for expanded powers comes amid significant controversy surrounding FHFA Director Bill Pulte. U.S. Rep. Robert Garcia has accused Pulte of "abuses of power" and "politicizing" the agency by making high-profile mortgage fraud referrals directly to the Department of Justice, bypassing the FHFA's Office of Inspector General. These referrals have targeted prominent Democratic officials, including New York Attorney General Letitia James, Senator Adam Schiff, and Federal Reserve Governor Lisa Cook.
While charges against James were dismissed by a federal judge due to an invalid appointment of an interim U.S. attorney, investigations into Schiff and Cook are ongoing. President Donald Trump reportedly attempted to remove Cook based on Pulte's referral, though she remains in her position following court rulings. The Supreme Court is set to hear arguments on the matter.
Further fueling the controversy, Pulte announced job cuts at Fannie Mae, with some affected employees reportedly working in ethics and internal auditing. The ousting of the FHFA Acting Inspector General shortly thereafter occurred amid reports that departing compliance officials were investigating Pulte's acquisition of mortgage records for Democratic officials and his handling of criminal referrals. Garcia's letter to Pulte cited reports of internal watchdogs being fired for investigating complaints against a "high-ranking company officer close to him."
In response to these concerns, the Government Accountability Office (GAO) has agreed to investigate whether Pulte and other FHFA employees have potentially misused federal authority and resources to accuse prominent Democrats and perceived political enemies of mortgage fraud. Senators Elizabeth Warren and Dick Durbin were among those who called for this investigation, questioning changes to mortgage fraud investigation standards under Pulte's leadership.