Fed Found Over 22,000 Mortgages Like Those Pulte Is Flagging

(Bloomberg) — President Donald Trump and his allies are demanding Federal Reserve Governor Lisa Cook resign over alleged owner-occupancy fraud — a practice the central bank itself has found to be “broad-based” across the US.

Philadelphia Fed researchers in a 2023 report assessed the number of “fraudulent investors” in the mortgage market, which they defined as those who had more than one owner-occupied home purchase loan within four quarters after the first one was originated. Federal Housing Finance Agency Director Bill Pulte has said that Cook took a mortgage on a property in Ann Arbor, Michigan, stipulating that it would be her primary residence, and then two weeks later declared the same for another mortgage on a Georgia property.

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The paper’s data set consists of 584,499 loans made from 2005 to 2017. Of those, 22,431 were considered fraudulent. The share of those claiming occupancy for better mortgage terms peaked ahead of the 2008 financial crisis, though remained steady for much of the ensuing decade at about 2% to 3%.

The findings are based on a subsample of data, meaning the number of mortgages fitting the central bank’s criteria could be higher. The researchers also caution that there are likely cases of accidental occupancy fraud, such as when borrowers were unable to sell their original home because of a worse-than-expected real estate market.

Scrutinizing the mortgages of Cook, who was nominated to the Fed by former President Joe Biden, appears to be the latest way in which Trump and his allies are using novel methods to pressure the central bank to lower interest rates.

The president said Wednesday that Cook “must resign now,” while Pulte claimed his accusations give him “cause to fire” her. If she were forced out, it would create another opening for Trump to appoint someone who would likely push for more aggressive rate cuts.

Pulte said “anybody can go look at these public documents” from Cook in a CNBC interview Wednesday. He cited four criminal statutes for Attorney General Pam Bondi to probe for potential charges. No charges have been filed and it’s not clear whether she will investigate.

Ronel Elul, a senior economic adviser and economist at the Philadelphia Fed who co-authored the 2023 report, didn’t elaborate beyond what was in the paper when reached for comment.