Fannie, Freddie close NY offices as Trump battles Letitia James

The Trump administration is leveraging its tight control over Fannie Mae and Freddie Mac to enlist the mortgage giants in the president’s long-running political battle with New York Attorney Letitia James by closing Fannie and Freddie’s offices in the state.

“We are shutting down the two New York offices for Fannie and Freddie as a result of Letitia James’ corrupt and dangerous business practices in the state,” a source “close to” the mortgage giants’ federal regulator, the Federal Housing Finance Agency (FHFA) told Fox News^[1].

President Trump posted a screenshot of the Oct. 2 Fox News story in a Truth Social post^[2] over the weekend, in which he called James “scum” who has cost New York “hundreds of billions of dollars in lost business” because of her “witch hunt” against him.

An FHFA spokesperson said in a statement to Inman that Fannie and Freddie’s New York offices “are closed, services will be uninterrupted, and there will be no change to Fannie and Freddie purchasing loans” in the state.

The FHFA declined to say how many offices Fannie and Freddie operate in New York, what their functions are, and how many people they employ.

A spokesperson for New York Governor Kathy Hochul said the move demonstrates that Republicans are more interested in playing politics than creating real opportunities for New York families to become homeowners.

“At a time when the nation is experiencing a housing crisis, this political stunt takes aim at everyday New Yorkers while doing nothing to advance housing affordability in our state,” a spokesperson for Hochul said in a statement to Inman. “Fannie Mae and Freddie Mac are tools to help working families achieve the dream of homeownership — not to serve as props in a political fight — and shuttering physical offices only underscores that this is about headlines, not housing.”

James’ office did not respond to Inman’s request for comment.

Although the federal government has been shut down since Oct. 1, past shutdowns haven’t affected staffing^[3] at Fannie and Freddie, which fund their own operations.

On the first day of the shutdown, Office of Management and Budget Director Russ Vought announced on X^[4] that the Trump administration was cutting nearly $8 billion in green energy projects in 16 states — all of which voted for Kamala Harris in the 2024 election.

The next day, Trump said he and Vought^[5] were looking at which “of the many Democrat Agencies” in the federal government to cut, and that some cuts will be permanent.

Fox News‘ source said the closure of Fannie and Freddie’s New York offices will be permanent. Although the companies will continue to employ New York residents and do business in the state “we are going to eliminate our physical presence,” the anonymous source said.

Criminal referrals of Trump opponents

In her role as attorney general, James last year won a $355 million judgment in a civil fraud case against Trump and two of his sons. An appeals court upheld Trump’s liability in August but voided the penalty, which had grown to $515 million with interest, as excessive, NPR reported^[6]. James has appealed^[7].

Under James’ leadership, the New York Attorney General’s Office brought nearly 100 legal challenges against the first Trump administration, Fox News reported.

James is one of three Trump administration opponents who have been the subject of criminal referrals to the Department of Justice by FHFA Director Bill Pulte. Pulte, who also chairs Fannie and Freddie’s boards of directors, has suggested the three falsified property records to secure more favorable mortgage terms.

The subjects of the referrals — James, Democratic Sen. Adam Schiff and Federal Reserve Governor Lisa Cook — have yet to be charged. All deny wrongdoing^[8], saying the allegations against them are aimed at intimidating them.

James’ attorney, Abbe Lowell, wrote Attorney General Pam Bondi in April demanding that the investigation be closed, saying Pulte cherry-picked documents to make accusations that were disproven long ago and amount to “political retribution.”

Pulte “is the latest administration officer to carry out the all-too-familiar playbook of the President: Praise the judicial system and those who serve it when he wins; criticize it when he loses, and attack those — attorneys and judges, alike — who are doing their jobs to protect and uphold the rule of law,” Lowell wrote Bondi^[9] in a letter obtained by the Associated Press.

Trump cited Pulte’s criminal referral in an Aug. 25 order attempting to remove Cook from her position on the Federal Reserve Board. The Supreme Court has ruled^[10] she can keep her seat until at least January, when it hears oral arguments in the case.

The Wall Street Journal’s conservative editorial board has characterized^[11] Pulte’s criminal referral of Cook as “an ominous turn in political lawfare.”

In making the criminal referrals, Pulte bypassed the FHFA’s Office of the Inspector General (OIG), which typically makes such requests to the Justice Department, Reuters reported Monday^[12], citing seven anonymous sources. By doing so, it’s likely Pulte violated ethics norms and regulations by bypassing rules intended to prevent federal officials from abusing their power for partisan purposes, legal experts told Reuters.

Pulte, the Justice Department and the FHFA OIG declined to comment to Reuters.

The FBI, IRS and the Department of Housing and Urban Development’s OIG have been assisting the Department of Justice in all three probes, Reuters reported, citing documents it has reviewed.

Pulte — who appointed himself^[13] as chair of Fannie and Freddie’s boards of directors after taking over as head of their federal regulator in March — has dismissed claims^[14] he has weaponized mortgage fraud.

“Occupancy fraud is a huge issue in the country where people are basically getting loans based on certain down payments and certain interest rates, based on saying that they live in one area and not another, as well as saying that they should qualify for loans that maybe they shouldn’t have,” Pulte told Donald Trump Jr. on his podcast^[15] in May “So, you know, just generally speaking, my thought is that mortgage fraud is rampant and we are doing everything we can. We’ve made a number of criminal referrals — not just [James] — and we will continue to prosecute.”

Fannie Mae announced in May^[16] it would use “cutting edge AI technology” developed by Palantir to detect mortgage fraud. Palantir’s contracts with government agencies like Immigration and Customs Enforcement (ICE) and the Internal Revenue Service have raised concerns with privacy and civil liberties advocates that the company says^[17] it’s addressing.

Three Trump Cabinet members have reported more than one home as their principal residence, ProPublica reported on Sept. 4^[18]: Labor Secretary Lori Chavez-DeRemer, Transportation Secretary Sean Duffy, and Environmental Protection Agency chief Lee Zeldin.

The three Trump Cabinet members denied wrongdoing, and a White House spokesperson called ProPublica’s reporting a “hit piece.”

Trump last month pressured Bondi^[19] to move forward with criminal cases against James, Schiff and former FBI Director James Comey, complaining, “They’re all guilty as hell.”

U.S. Attorney Erik Siebert, who had been investigating allegations against James and Comey, resigned the same day. His successor, Lindsey Halligan, signed a Sept. 25 grand jury indictment of Comey, which stems from testimony he gave nearly five years ago before the Senate Judiciary Committee.

Another top Department of Justice prosecutor looking into the allegations against James, Elizabeth Yusi, has told colleagues she has not seen probable cause to charge her with mortgage fraud, MSNBC reported Monday^[20], citing “two people familiar with her discussions.”

The Department of Justice declined MSNBC’s request for comment.

Ruling in an unrelated case last week, U.S. District Court Judge William Young — a Reagan appointee — warned against weaponization of Freddie Mac and government agencies “against the President’s ever growing list of ‘enemies.’”

In a 161-page opinion^[21] on his ruling that the Trump administration’s moves to deport pro-Palestinian academics are an unconstitutional attack on free speech, Young mentioned Freddie Mac in passing, using its formal name — the Federal Home Loan Mortgage Corporation.

“If the distinguished Homeland Security intelligence agency can be weaponized to squelch the free speech rights of a small, hapless group of non-citizens in our midst, so too can the Federal Home Loan Mortgage Corporation, and the audit divisions of the I.R.S. and the Social Security Administration be unconstitutionally weaponized against the President’s ever growing list of ‘enemies’ or opponents he ‘hates’ notwithstanding that political persecution is anathema to our Constitution and everything for which America stands,” Young wrote.

Fannie and Freddie have been under government conservatorship since 2008, when the companies were facing billions in losses during the housing crash and Great Recession of 2007-2009.

As Fannie and Freddie’s conservator^[22], the FHFA guides business decisions that determine what kinds of mortgages the companies can back and how much they charge for their guarantees, among other things.

Under Pulte’s leadership the FHFA has reined in programs^[23] and practices designed to boost lending in minority communities, protect borrowers from unfair or deceptive practices, and assess risks associated with climate change.

Conservatives have long hoped that the government would eventually privatize Fannie and Freddie. In a departure from its policy during the president’s first term, the Trump administration has signalled that it intends to sell part of the government’s stake in the companies in a public offering while maintaining tight control over them.

That approach is likely to keep mortgage rates from climbing, but could leave taxpayers on the hook if Fannie and Freddie get into trouble again, policy experts have warned^[24].

On Sunday, Trump claimed on Truth Social^[25] that homebuilders “are sitting on 2 million empty lots” and that he’s “asking Fannie Mae and Freddie Mac to get big homebuilders going.”

Pulte is the grandson of homebuilder PulteGroup founder William J. Pulte. Although no longer affiliated with the company, in 2016 Pulte helped his grandfather oust PulteGroup Chairman and Chief Executive Officer Richard Dugas and served on the company’s board of directors until May 2020.

Editor’s note: This story has been updated to include a comment by New York Governor Kathy Hochul’s office; a Reuters report that criminal referrals made by Bill Pulte bypassed the FHFA’s Office of the Inspector General; and a report by MSNBC that the prosecutor reviewing the allegations against Letitia James has not found probable cause to charge her with mortgage fraud.

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Email Matt Carter^[28]