Mortgage-Fraud Accusations Are Trump’s New Political Weapon

The new probes represent an aggressive variation on efforts to use financial documents to take down opponents.

The Trump administration has a new weapon at its disposal in its efforts to take down Democrats and their appointees: mortgage records.

Bill Pulte, who President Trump picked to lead the Federal Housing Finance Agency.

Members of the administration have now alleged three public officials have committed mortgage fraud, referring each to the Justice Department. The administration has signaled that it has just gotten started: U.S. Pardon Attorney Ed Martin was recently tapped “to investigate fraud by public officials in mortgages,” according to a letter Martin sent.

The targets have denied wrongdoing, but the probes represent an aggressive new spin on opposition research that has long dug into tax records and financial disclosures public officeholders have to make. Mortgage applications go beyond the typical disclosure requirements.

Another twist is the allegations are coming from a government official overseeing an agency able to access massive amounts of mortgage data.

At the forefront of the campaign is Bill Pulte, a homebuilder heir Trump tapped to lead the government agency that oversees Fannie Mae and Freddie Mac, the largest players in the mortgage market.

At the historically quiet but powerful Federal Housing Finance Agency, Pulte has turned himself into a Trump attack ally, probing mortgages of prominent Democrats and a Biden-appointed official at the Federal Reserve.

Pulte made himself the chair of Fannie and Freddie, which back nearly half of all mortgages in the U.S., and has taken an unusually active role at both firms. He partnered Fannie with Palantir, the data analysis firm co-founded by Peter Thiel, in a campaign to root out mortgage fraud.

This past week, he alleged Federal Reserve governor Lisa Cook committed mortgage occupancy fraud. He said publicly he referred her to the Justice Department and then started calling for her to resign or be fired.

Pulte had already been on a campaign against Fed Chair Jerome Powell, whom Trump has been pressuring to cut interest rates.

Cook has sided with Powell on keeping rates steady so far. The president said Friday he would fire Cook if she didn’t resign.

And Martin, in a letter to Powell citing his role as mortgage fraud investigator, urged Powell to fire Cook himself instead of letting her serve “with a cloud hanging over her.” The Fed chair can’t fire governors.

Cook said that she wouldn’t be “bullied” into resignation and that she would gather information to answer “any legitimate questions” about her financial history.

Pulte has indicated he got tips and used public documents to gather the information he has handed to prosecutors.

Mortgage occupancy fraud is when a borrower says he or she plans to use a property as a primary residence, even though it’s a second home or an investment. That can get the borrower better terms on the interest rate or down payment. While mortgage fraud could carry significant penalties, it is rarely prosecuted.

A White House official said that anyone who engages in criminal activity should be held accountable and that Trump’s “only retribution is success” for the American people.

‘An insane amount of tips’

The Justice Department has already launched probes into similar claims of mortgage issues against New York Attorney General Letitia James and Sen. Adam Schiff (D., Calif.), both vocal Trump critics.

Schiff’s lawyer, Preet Bharara, called the allegations “transparently false.” A spokesman for James has called them a “weaponization of the justice system.”

Both of those also started with Pulte. In an appearance on Bloomberg, Pulte said he has made “a lot” of referrals for criminal investigation related to mortgage fraud, sometimes “multiple per day.”

“We’ve pored through many of these tips,” Pulte said. “We have seen just an insane amount of tips on mortgage fraud.”

Friday, he said on X he would refer two more people for mortgage fraud.

Heading into an election season, mortgage documents could become even more a source of contention across the country, for both sides of the aisle. Mortgage fraud allegations have also emerged against Texas Attorney General Ken Paxton, a Republican who is campaigning for a Senate seat. (Paxton’s campaign has declined to comment on his properties.)

Mick Mulvaney, a former chief of staff for Trump who had faced questions about taxes on his nanny when he was facing Senate confirmation, says the attacks are going to be part of the new normal for Republicans to use versus Democrats now.

“Right now it’s classified documents and mortgage applications,” Mulvaney said of the new opposition research. “Whether or not you pretend to need a wheelchair at an airport to get on the plane faster, that may be used next if that’s illegal.”

Write to Gina Heeb at gina.heeb@wsj.com and Brian Schwartz at brian.schwartz@wsj.com