The Federal Housing Finance Agency has sent a criminal referral to the Department of Justice, alleging that James falsified mortgage records to obtain more favorable loans on a Virginia home.

A federal agency has referred New York Attorney General Letitia James to the Department of Justice for possible prosecution over allegations of mortgage fraud.

The Federal Housing Finance Agency (FHFA) claims that James appeared to have falsified mortgage records to obtain more favorable loans on a Norfolk, Virginia, home she purchased in 2023. According to the FHFA letter, James identified the property as her primary residence on mortgage documents and a Fannie Mae/Freddie Mac form, despite being legally required to live in New York as a statewide elected official.

The case centers on the financial incentives associated with identifying a home as a primary residence versus a secondary home or vacation home.

Banks offer lower interest rates to primary residences, as homeowners are less likely to default on such loans compared to second homes.

A real estate attorney explained that this type of fraud is common in the real estate market and does not necessarily rise to the level of criminal activity, but it is still considered mortgage fraud.

James' office has stated that a separate loan application for the Virginia home indicated she would not live at the property full time, and her mortgage agreement did not require her to occupy the property as her primary residence.

The criminal referral also cited past reported issues with James' properties, including a 2001 purchase of a Brooklyn property where the certificate of occupancy lists the property as a five-unit residence, while James' mortgages list it as four units.

The Department of Justice is reviewing the allegations, with a White House spokesman stating that 'no one is above the law.'