Tip Line Will Bust Lying Mortgage Applicants, Says Trump Administration (Before Going After New York’s AG)

The Trump administration believes mortgage fraud is out of control. So, federal officials now run a tip line, to get people to report suspicious behavior.

The administration is so gung-ho about mortgage fraud that it’s even accused New York Attorney General Letitia James of filing improperly completed mortgage applications.

That’s bullying, and the charges are untrue, says a representative of the A.G.

Tip Line Announced

Federal Housing Finance Agency Director William Pulte, the Trump administration’s top mortgage regulator, intends to collect reports of suspicious mortgage applications.  An email address lets “anyone and everyone” send tips, said Pulte on social media.

Lying on a mortgage application is the typical example of mortgage fraud. To get a loan, or to get one with better interest rates, some buyers might claim to have more reliable sources of income than they have.  They may say a home is going to be used for living purposes when they mean to rent it out. And so forth. As a white-collar crime, the manipulation of mortgage loans can lead to grand juries and exceptionally heavy penalties.

Realtor.com® noted that the new tip line appeared soon after Pulte announced firings of 100+ staff members at Fannie Mae, allegedly for ethics violations.

Who Is Bill Pulte?

William Pulte is a high-profile real estate developer. He’s now directing the Federal Housing Finance Agency (FHFA) as a Trump appointee.

Pulte has already revamped Freddie Mac and Fannie Mae, which answer to the FHFA. Pulte took over as the chair of both boards, after pushing the existing leadership out.

Since then, Pulte’s been actively using social media to condemn:

• The work done by Fannie Mae and Freddie Mac to deter misleading or unfair loan requirements.
• The preparatory steps taken by Fannie and Freddie to prepare their portfolios for the effects of global heating.
• The efforts Fannie and Freddie have undertaken to help communities that have traditionally struggled buy homes. This includes providing down payment and closing cost assistance for first-time mortgage borrowers in underserved communities.

• Initiatives by which builders included affordable homes in their developments.
• The availability of loans meant for renovating existing affordable housing.
• The prior administration’s work to eliminate appraisal bias.

Social media posts from the Federal Housing Finance Agency have announced suspensions of many of the above initiatives. Pulte also tweeted that Fannie Mae and Freddie Mac will be “evaluating ways to ‘recall loans’ that have been obtained fraudulently.”

(“Like Trump, FHFA head Bill Pulte favors governance by social media,” wrote mortgage commentator Luke Baynes.)

Bill Pulte’s FHFA is also rolling back the federal diversity, equity, and inclusion efforts of prior administrations. Pulte has declared DEI “dead.” And so the new administration is uprooting special help for those who have a harder time of safely becoming deed holders — say, because they or their families never inherited generational wealth.

Is the rollback of assistance and protections for the underserved really the way an agency effectively fights fraud? You be the judge. 

But Wait! Didn’t Trump Promise Affordable Housing?

Yes, you aren’t imagining things.

Upon inauguration, Trump ordered something called Emergency Price Relief for hopeful home buyers. The Trump order observed, correctly, that “many Americans are unable to purchase homes due to historically high prices” but then blamed regulations, in part, for increasing builders’ costs. The implication? Peel away federal oversight, and home prices will drop. Given all the tariff anxiety among builders today, it would be hard to make a case that the Trump administration is easing construction woes.

Beyond that, the executive order is vague. It does not offer any guidance for actually lowering the price of homes for sale.

At the same time, the administration is pushing to take Freddie Mac and Fannie May away from their oversight roles, and move them into the private sector.

Here again, privatization, if it happens, will not assist struggling buyers. It will not bring us what we’re all looking for: access to deeds. Instead, it will vastly enrich those who control the most shares of the firms being privatized.

New York’s Letitia James Becomes a Target

One day before announcing the tip line, Bill Pulte sent a letter to the federal Justice Department, referring New York State’s Attorney General Letitia James for a criminal investigation. Pulte accuses A.G. James of, yes, falsifying information on mortgage applications. A grand jury has already begun sending subpoenas.

A.G. James has — for years and with some degree of success — challenged Trump under New York’s laws. Most readers will recall that just two years ago, A.G. James successfully prosecuted a civil case involving alleged fraudulent loan applications made by the Trump Organization. That case resulted in a $450+ million judgment against Trump’s business. Trump himself has recently called James “totally corrupt” and a “wacky crook” who should immediately leave her job.

Now, Bill Pulte says James made false statements on loan applications.

The online court reporting site Democracy Docket interviewed Prof. Will Thomas, who teaches business law at the University of Michigan. The prof said it’s too early to know everything that may be in play, but the DOJ case against James has a number of strange aspects. First, mortgage fraud cases are not a core part of what the department pursues.

“Even if you zoomed in on white-collar fraud,” Democracy Docket quotes the professor as saying, mortgage fraud would only amount to under one percent of the DOJ’s regular case load. A.G. James would’ve had to have committed fraud “so egregious that the federal government needs to make this one of its 20 fraud cases this year,” said the prof. It’s hard to imagine that happened.

Furthermore, federal officials are not known for amplifying their investigations through public media channels or talking about them at all. In this case, they are doing that plus a lot more. Federal spokespersons are accusing A.G. James of unethical conduct. They’re tearing down her character in public. All of this makes the case against James unlikely to hold up to unbiased scrutiny.

A representative has said Attorney General James “will not be intimidated by bullies—no matter who they are.”

Meanwhile, A.G. James is one of a group of state Attorneys General suing Elon Musk’s DOGE for harming the public. And so the struggle continues.