A new court filing from New York Attorney General Letitia James’s legal team has upended the narrative around the mortgage-fraud case against her, revealing that senior fraud investigators inside Fannie Mae did not believe there was clear evidence she had committed any crime. The disclosure landed Monday and paints a far more complicated picture of a case that has been closely tied to the political orbit surrounding President Donald Trump.
James, who has pleaded not guilty, is charged with bank fraud and making a false statement to a financial institution. Prosecutors allege she used a Virginia home as an investment property despite certifying it as a secondary residence to secure better mortgage terms. Her lawyers now say the internal communications they’ve obtained show that even the experts tasked with evaluating such cases were unsure at best, and unconvinced at worst, that her actions amounted to fraud.
According to the filing, Sean Soward, Fannie Mae’s director of mortgage fraud investigations, wrote in June to colleague Jennifer Horne, the company’s vice president of financial crimes, that the evidence in the case was “certainly not clear and convincing.” For James’s team, the comment speaks volumes. If the people whose job it is to assess mortgage fraud saw major gaps, they argue, the decision to pursue charges must have come from somewhere else.
And that “somewhere else,” they say, leads straight to Bill Pulte, the head of the Federal Housing Finance Agency and a well-known Trump ally. The filing accuses Pulte of pushing the investigation forward despite warnings from within the agency. James’s lawyers say he sidestepped the usual guardrails, pulled non-public mortgage information and personally urged the U.S. Attorney’s Office to indict her. The indictment ultimately handed down, according to the filing, mirrored the calculations Pulte had supplied himself.
The document goes further, arguing that Pulte “abused his position” to target James because she happens to be one of Trump’s political adversaries. James is, of course, not the first Trump critic to find herself facing criminal charges in the aftermath of his calls for the Justice Department to investigate opponents. Her team is asking the judge to dismiss the case entirely on the basis of what they describe as outrageous government conduct.
Prosecutors tell a different story. They argue the Virginia property at the center of the case was more business venture than personal home, and that James misrepresented its status to obtain advantageous terms on the loan. The house, a three-bedroom place in Norfolk, has become a surprisingly contentious symbol in a political and legal slugfest that seems to widen by the week.
Meanwhile, the filing notes that ethics officials inside FHFA and Fannie Mae were removed or reassigned after raising concerns about how certain mortgage records were accessed. Those moves have stirred even more questions around whether the investigation followed protocol or stepped outside the lines.
Lawmakers have begun taking notice as a group of Democratic senators, including Elizabeth Warren, has called on the Government Accountability Office to investigate whether Pulte used his authority to target Trump’s political rivals. If they move forward, that inquiry could shape the larger conversation about how federal agencies handle sensitive financial and regulatory data.
For James, if the judge agrees with her lawyers that the case is tainted beyond repair, the charges could be tossed before trial. If not, she’ll head into a courtroom carrying both the allegations and the newly revealed doubts from the very investigators whose expertise the government usually relies on.
