“Freak” referral lawsuit by heads of U.S. housing financial institutions | Trump administration

tHis head of federal housing finance institutions embraced a very unusual process, accusing Lisa Cook of Fed Former officials and experts say the governor committed mortgage fraud. A former senior official called the director’s involvement in the crime recommendation “weird”.

Donald Trump appointed William Pulte, a businessman and major Republican donor, earlier this year, to supervise the strong housing agency. Accused Chefs commit mortgage fraud by distorting the house as their primary residence, which has the potential to obtain a more favorable mortgage rate. The Justice Department formally investigated whether Cook committed fraud and issued subpoenas related to the transaction. Cook’s lawyer called the difference “Document errors”She denied any misconduct.

Trump used the allegations as the basis for attempting to fire Cook, who strongly denied the allegations and filed a firing in court. Pulte also made similar recommendations for the New York Attorney General Letitia James and California Senator Adam Schifftwo Trump’s political rivals.

Investigations of mortgage fraud are usually made by Office of the Inspector General of the Federal Housing and Finance Agency (OIG)an institutional regulator equipped with expertise by attorneys and agents to investigate crimes, including mortgage fraud. At that time, OIG was the office that usually conducted criminal referrals.

“It’s very strange that Pulte is the one who makes a criminal referral on his own and it’s not from IG’s office,” said former FHFA chief of staff. “If we think there’s a possible criminal activity, it’s the IG’s review, determination and IG will do any referrals, not agencies.”

Three other former officials across the Inspector General’s Office, the FHFA said Pulte’s involvement was unusual.

After taking up a role earlier this year, Pulte started the FHFA hotline to report waste, fraud and abuse. According to people familiar with the matter, the move seems strange to some in the Inspector General’s office.

“The FHFA directors have made a single request to the Department of Justice for someone to investigate alleged mortgage fraud, which is certainly unusual, if not unprecedented,” said Guy Cecala, executive chairman of an information company and research firm, which covers the mortgage lending market for more than 40 years. “Historically, we have not seen many people being prosecuted for mortgage fraud for misrepresenting the occupation of their homes.”

Former officials said that while the FHFA inspector general would refer it from the FHFA, their investigations were usually trapped from the FHFA. Separation helps protect borrowers’ privacy and their sensitive mortgage information. The Office of the Inspector General usually only brings cases, resulting in huge losses to FHFA-regulated government-sponsored businesses Fannie Mae and Freddie Mac.

The extent to which FHFA inspector general is involved in Cook’s mortgage loans is unclear. Also uncertain is whether Pulte requires loan documents (highly sensitive information) or claims to be based entirely on publicly available mortgage information. In Schiff’s case, OIG seems to have at least documents on its home loans, According to the Los Angeles Times.

“Your inquiry is related to the public statement of the FHFA directors. I recommend you contact the FHFA media store,” a spokesperson for the FHFA Inspector General said in a statement. “There is no comment on the existence or absence of the investigation conducted by FHFA OIG in the office.” FHFA did not return a request for comment.

Pulte declined to say why his agency started investigating Cook. It is widely believed that the decision was politically motivated because Trump wanted to evacuate her from the Fed committee to stack her up with his appointees.

It is important to understand the origin of the Pulte inquiry, as misappropriation on mortgage applications does not seem uncommon. Texas Attorney General Ken PaxtonRepublicans, and At least three members In Trump’s cabinet, multiple places were listed as their primary residence, but they did not face scrutiny from Cook.

“The issue with Cook’s loan archives won’t be captured for some regular reviews. Write in a post In the blog credit phase. “Instead, the only problem with anyone who notices Cook’s loan application is that, as the head of FHFA, Pulte directed Fannie or Freddie to withdraw her application. This is unheard of.”

Additionally, Pulte conducted a criminal investigation into Cook without presenting real evidence of crime.

“If Cook breaks his promise for the use of property (it’s not clear) Separate Blog Posts In August. “In order to make fraud, first of all, the promise must be fulfilled. Pulte has no evidence of Cook’s intention when he took the mortgage. He did not even show a breach of contract, let alone common law fraud, or federal criminal law violations.”

Observers say that loans are also rare if they are paid. “This is unusual because I don’t know any actual losses that occur. I’m assuming none of these mortgages defaulted.

Following the financial crisis, Fannie Mae and Freddie Mac began random sampling of mortgages to see if there was a problem that could put them at risk. However, in the event they find the problem, few people will seek criminal penalties for borrowers.

“Usually in this case – this is just a precedent – neither Minnie nor Freddy were involved in the prosecution, nor even the Justice Department,” Sekara said. “They would just say that we saw the issue with this mortgage, and they only asked lenders to buy loans from Fannie Mae and Freddie Mac Securities.”