Now, former President Donald Trump has stepped in to make some mortgage fraud claims of his own. He is suing many of his political enemies, including New York AG Letitia James and Senator Adam Schiff. Occupancy fraud Under his administration, Trump has already begun increasing the levels of scrutiny regarding occupancy fraud. This means people lying about properties being their primary residences when in reality they don’t live in them. Those claims raise serious questions as to whether and how such fraud could be proven in a court of law.
While these investigations by the Trump administration have largely delved into occupancy fraud, a kind of fraud that, as detailed below, can entail huge financial motivations for borrowers. Against a growing, more competitive, and successful mortgage alternative landscape, these same lower interest rates will cost borrowers thousands of dollars each year. According to data from the analytics firm Cotality, only 1 out of every 116 mortgage applications in Q2 2025 had a risk flag for potential fraud. This suggests that even though the potential for fraud is there, it is still quite rare.
An accusation of mortgage fraud, as Clifford Rossi, finance professor at the University of Maryland explained, is much more complicated than it may seem. He stated, “It can be as honest as a clerical error,” highlighting that not all discrepancies indicate intentional wrongdoing. This view highlights the challenge of proving fraudulent intent in most cases.
Letitia James, New York Attorney General, as biography. She has recently been indicted for bank fraud and making false statements to a financial institution in relation to obtaining a mortgage loan. Federal prosecutors allege that James deceived the loan provider about her purpose when applying. She tried to get funding for a three-bedroom single family home in Norfolk, Virginia. She is said to have falsely asserted that she would be using the property as a second home. Instead, she listed it on Airbnb and created an investment property.
In addition to James, Senator Adam Schiff is under federal investigation for purportedly presenting two homes in different states as his primary residences to banks. The questions posed in this inquiry go beyond possible criminality to the fundamental question of the integrity of his mortgage applications and likelihood of obtaining favorable terms on loans. Federal Reserve Governor Lisa Cook has also been under attack. She purportedly falsified the purchase of a vacation property as her principal residence on a loan application.
The difficulty of obtaining convictions against these officials is immense. Legal experts suggest that proving any instance of mortgage fraud among the three—James, Schiff, and Cook—could be hard, if not impossible. Add in the fact that nuanced questions around intentionality and the potential for clerical mistakes abound, and it gets even stickier.
Impeached Trump is well known for his incitements to quickly prosecute his adversaries. He called on law enforcement to bring charges against James, Schiff, and former FBI director James Comey. On social media, he dramatically proclaimed, “JUSTICE MUST BE SERVED, NOW!!!
Kimber White, president of the National Association of Mortgage Brokers, wrote, urging the industry to think big about what these allegations could mean. She remarked, “When people talk mortgage fraud, it’s a big picture,” emphasizing that the issue extends beyond individual cases and calls into question systemic practices within the mortgage industry.
In a statement, AG Letitia James has categorically denied any wrongdoing. She has since filed suit to prevent Trump from firing her through her own termination notice. This continuing courtroom drama only complicates things further, though, in a highly politicized setting.
Criminal investigations into these terrible incidents are continuing. The ramifications of these allegations could potentially ignite broader conversations on accountability and ethics in our political and financial systems. The intersection of politics, legality, and finance could be key territory for opposition, as this gamechanging action plays out.
