It Was Meant to Solve the Housing Crisis. Trump Is Using It to Create an Enemies List.

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Donald Trump’s second term has been an exercise in projection. After years of insisting the federal government was engaged in a “witch hunt^[2]” against him, he has turned its machinery on his own enemies, critics, and anyone who stands in the way of his agenda. Yet, what makes this shift remarkable is not simply that Trump is targeting his adversaries. That much was expected. Instead, what is particularly striking is the peculiar charge the president has chosen as his weapon of choice. Rather than relying on splashy accusations that usually dominate cable news, such as corruption, election interference, even sedition, Trump is taking down his opponents over claims of mortgage fraud.

It’s a new twist on a long, ugly tradition. Trump’s use of mortgage fraud is relatively novel, but he’s far from the first president to use the federal government’s vast trove of financial data as a political cudgel. Just this Monday, Trump fired Federal Reserve Board Governor Lisa Cook^[3] after accusing her of falsifying records on past mortgage applications. In recent weeks, Sen. Adam Schiff and New York Attorney General Letitia James^[4] have faced the same allegation. Mortgage fraud, for the uninitiated, typically means intentionally misstating something on a loan application^[5], such as income, assets, or even whether you intend to live in the house. This type of fraudulent conduct is not trivial—penalties can include millions of dollars in fines and prison sentences measured in decades—but they are hardly the kind of scandal you expect to end a career in Washington^[6]. Which raises the obvious question: Why mortgage fraud?

The answer has less to do with the crime itself than with the ease of finding it. Mortgage fraud may sound obscure, but it is the kind of violation that leaves a long paper trail, and the federal government now happens to sit on an enormous archive of those papers. Every borrower who wants a typical government-backed mortgage (a conforming loan^[7]) must fill out the Uniform Residential Loan Application^[8], and since 2023, the Supplemental Consumer Information Form^[9], which together capture the important personal and financial details about a household, such as income and employment history, bank accounts and debts, family structure and marital status, property ownership, past bankruptcies or foreclosures, race and ethnicity, military service, whether the borrower has received housing counseling, and even their preferred language of communication. At closing, those files are supplemented with appraisal reports and a standardized closing disclosure^[10], all of which flow electronically into Fannie Mae and Freddie Mac’s databases^[11]. Fannie and Freddie are still in federal conservatorship^[12], meaning that the Federal Housing Finance Agency has supervisory access^[13] to the loan-level data of tens of millions of mortgages^[14]. As a result, the government has, at its fingertips, a dossier of detailed and often sensitive information on virtually every ordinary borrower.^[15] Which is why, if you want to target a political adversary, their mortgage paperwork is almost certainly already there, waiting to be mined.

Technically, the FHFA is an independent agency^[16], which in theory is supposed to insulate its decisions from direct White House control. But independence here is more formal than practical. The agency is run by a director whom the president appoints, and since the Supreme Court’s 2020 decision in Collins v. Yellen^[17], that director can be removed without cause^[18]. That means the Trump administration effectively controls who oversees the data. In normal times, the FHFA is supposed to act like a bank regulator, not an intelligence service or a criminal law enforcer. Its access to Fannie and Freddie’s mortgage databases is supposed to be used to keep the housing finance system stable and fair^[19], not to smoke out individual cases of mortgage fraud. In normal times, potential fraud would reach the Justice Department through routine referrals from Fannie Mae, Freddie Mac, and the Federal Home Loan Banks^[20]. What’s unusual (and troubling) about the current moment is the sense that the White House itself is steering those referrals^[21], using FHFA’s supervisory reach into Fannie and Freddie as a back door into millions of Americans’ financial lives.

Just this month, FHFA director and former Trump donor William Pulte^[22] sent a letter to Attorney General Pam Bondi alleging that Lisa Cook had falsified her residency status on two properties, an accusation drawn directly from mortgage records under FHFA supervision. Trump seized on the referral, blasting out on Truth Social that Cook “must resign, now!!!^[23]” Two days later, she was gone. The episode shows how the combination of FHFA’s access to virtually every mortgage in America, the absence of clear rules limiting when and how that data can be used, and the president’s control over the agency’s leadership can turn what should be a technical compliance issue into a political guillotine.

And Cook’s ouster is just the tip of the iceberg. The FHFA’s reach extends far beyond a single appointee’s mortgage file. Because Fannie Mae and Freddie Mac guarantee or own about two-thirds of America’s $12 trillion mortgage market^[24], the agency has supervisory access to loan-level data covering tens of millions of households. If you own a home with a conforming loan, your data is in FHFA’s system. In Cook’s case, the trigger was disputed residency certifications on properties in Ann Arbor and Atlanta. But the same data could just as easily be searched to find some technical inconsistency in any adversary’s file. What we are watching, in real time, is how an agency created to stabilize the housing market can be repurposed into an opposition-research arm of the presidency.

A New Twist With a Long, Ugly History

Although the FHFA is a relatively young institution, the spectacle of a president mining an agency’s data for political advantage is not new. We have been here before with the IRS. Since its creation during the Civil War^[25], the IRS’ greatest power has come less from its ability to levy assessments or collect debts than from the vast amounts of information it compels Americans to disclose^[26]. That power is rooted in the tax return. Section 7805(a)^[27] of the Internal Revenue Code authorizes the Treasury secretary—delegated to the commissioner of Internal Revenue—to “prescribe all needful rules and regulations for the enforcement” of the code. The limits on what information returns may demand have remained virtually untested^[28]. As a result, returns (informational and tax-related) capture personal information well beyond income and deductions, such as an individual’s addresses, business structures, family relationships, charitable donations, and even details with political or religious significance.

Because most Americans are legally required to file detailed annual returns^[29], the IRS holds what one Senate committee later called “the largest potential source of information about the personal lives of Americans^[30].” From early on, presidents, attorneys general, and intelligence agencies recognized the temptation of that source and repeatedly tried to tap it. Congress first prohibited public disclosure of tax returns after it reenacted the income tax in 1913^[31], but the law still left wide latitude for presidents and federal agencies to gain access^[32]. Eventually, the pressures of the Cold War made the temptation to use this information for political purposes irresistible. By the 1950s, the FBI had built what amounted to a standing pipeline into the IRS. As part of its COINTELPRO^[33] counterintelligence program, which was designed to undermine the operations of the Communist Party in the United States, the Bureau routinely obtained the tax returns of party members^[34]. Decades later, Congressional investigators discovered that the FBI enjoyed “virtually unrestricted access” to any tax file it wanted. The Bureau never had to explain why it needed the information, and the IRS never asked. Returns were used to trigger audits, not to enforce tax law, but to “expose, disrupt and otherwise neutralize the activities of the target organizations and their leadership^[35].”

That pattern repeated across social and political movements. In 1964, the FBI requested and received “all available information^[36]” on Martin Luther King Jr^[37]. and the Southern Christian Leadership Conference, including IRS audits, investigative files, and contributor lists. In 1968, the Bureau’s “Key Activists^[38]” program used IRS returns to neutralize New Left leaders. For example, one Midwestern professor’s deductions were scrutinized not for tax compliance but to distract him from organizing protests at the Democratic convention. Similar tactics were used against the Ku Klux Klan^[39], Students for a Democratic Society^[40], and Black Power groups^[41]. And even in the rare case where the ends obtained by accessing return data were laudable, the fact that the IRS gave the FBI virtually unrestricted, unchecked access to this information was certainly concerning.

Section 6103 of the Internal Revenue Code, ostensibly a safeguard against the misuse of taxpayer information, proved toothless. By making the president the ultimate arbiter^[42] of when and under what circumstances returns could be opened, it created a loophole large enough to swallow the rule. The president or attorney general could simply delegate the request to staff, allowing the White House to obtain sensitive return information while concealing its political motives. Procedural reforms within the IRS fared little better. As the Senate later found^[43], the IRS almost never questioned such requests and treated them as presumptively valid, and once the returns left the building there were no limits on how they might be used.

Richard Nixon, however, pushed this tendency further than any president before him. From his first year in office, Nixon installed trusted aides like Clark Mollenhoff and later Roger Barth^[44] to provide him and his administration with access to information on specific taxpayer returns. Although the president was not expressly prohibited from accessing returns, this arrangement was structured to give Nixon plausible deniability. Mollenhoff would orally request returns, and the IRS would “infer” that each request carried the president’s authority^[45]. The service’s own chief counsel endorsed this theory, concluding that the president had an “unquestioned right” to see any return and could delegate that right to his staff. That interpretation meant aides like H.R. Haldeman, John Ehrlichman, or John Dean could effectively demand taxpayer files by invoking the president’s name without any written authorization, and without oversight.

In practice, Nixon’s circle sought tax data to compile the famous Enemies List^[46], as well as other retributive activities, such as spurring audits of antiwar activists, digging into Democratic National Committee Chair Larry O’Brien’s finances, and even to track potential Democratic donors. By vesting control of access in the presidency, Section 6103’s supposed safeguard proved illusory. The IRS treated informal staff requests as if they carried the force of law. Nixon’s schemes flourished in this gray zone between formal legality and practical abuse. It did not matter whether the president signed an order or offered any justification for disclosure. What mattered was that the service believed it could not say no.

To their credit, some officials inside the IRS resisted. Commissioner Randolph Thrower^[48] tried to hold the line against political meddling, and later Johnnie Walters^[49] locked the White House’s audit lists in his safe rather than act on them. Nixon’s response was simply to replace leadership. When he began outlining his requirements for a new IRS commissioner in May 1971, he told aides Haldeman and Ehrlichman that he wanted “a ruthless son of a bitch^[50]” who would do what he’s told, that “every income-tax return I want to see I see, that he will go after our enemies and not go after our friends.” “Otherwise,” Nixon warned, “he doesn’t get the job.” In this crass (although today familiar) language, the president made clear that access to taxpayer returns was a political prerogative.

How We Got Here—and How We Could Fix It

It wasn’t until the Watergate scandal broke that this pattern was interrupted, as congressional investigators uncovered the Enemies List^[51] and the paper trail of IRS disclosures. The fallout prompted a wave of reform. In 1974, Congress passed the Privacy Act^[52], restricting the creation of secret federal data banks. Two years later, as part of the Tax Reform Act of 1976^[53], lawmakers overhauled Section 6103 to make tax-return confidentiality the rule, not the exception. Tax returns and return information were declared confidential; disclosure could occur only under narrow statutory exceptions, such as referrals to the Justice Department for tax prosecutions, to congressional tax-writing committees, or to state revenue agencies. While the president maintained authority to solicit returns, every disclosure had to be logged, with records of when, why, and to whom the information was released, ensuring that the process was visible rather than hidden. And to give those rules teeth, unauthorized disclosures were made a felony punishable under 26 U.S.C. Section 7213^[54]. These reforms were designed to do what decades of internal norms and presidential restraint had failed to do: prevent the White House and outside agencies from secretly turning the IRS into a political intelligence service.

No such protections exist for the FHFA today. Unlike the post-1976 IRS, the agency sits atop tens of millions of mortgage files without a statutory framework that makes disclosures confidential by default, limits sharing to narrow exceptions, or forces transparency through public logs. There are no criminal penalties^[59] if an FHFA director decides to pass along a mortgage file to the White House, nor any requirement that the public or Congress be notified. Which means the agency is effectively where the IRS was before Nixon, holding a vast reservoir of personal financial data that can be quietly mined for political purposes, with virtually no rules to stop it.

Congress should not wait for another scandal to impose on the FHFA what it finally imposed on the IRS nearly 50 years ago. The mortgage data needs to be insulated by a statutory wall of confidentiality, strict limits on disclosure, public logs, and criminal penalties for abuse. Of course, such reforms would not, on their own, guarantee that an agency cannot be bent to the will of a determined president. As the IRS’ own history shows, rules are only as strong as the culture and leadership willing to enforce them in the face of political pressure. That is a challenge both the IRS and the FHFA still face today, and it may ultimately demand reforms deeper than a confidentiality statute alone. But at the very least, Congress can fix this glaring legal vulnerability. If the FHFA holds data on nearly every American homeowner, then giving that data the same protections as tax returns is the bare minimum we can do to prevent abuse.

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