Letitia James reaps what she sows after leveling 'laughable' case at Trump: expert
The Trump administration's criminal referral targeting New York Attorney General Letitia James for reported mortgage fraud likely never would have unfolded if not for the Democrat's years of targeting the president in court, a New York City real estate attorney and expert told Fox News Digital.
"To be perfectly frank, this is a retaliatory case brought by the president for what the attorney general did to him over the last several years," New York City attorney Pierre Debbas, partner and founding member of real estate law firm Romer Debbas, told Fox News Digital in a Zoom interview Thursday morning. "Both cases, quite honestly, are very weak cases.
"The attorney general's case that was brought against Donald Trump was honestly a pure manipulation of the legal system, and it was laughable," he continued, referring to the civil fraud case she brought against Trump. "Something that's never taken place in the history of New York that was isolated at one particular person for a politically driven purpose.
"Now, on the flip side, this serves the same purpose, right? This is the president's way of seeking retaliation against the attorney general for something that, in reality, is, while it's considered mortgage fraud, it's not criminal," he continued. "And it's not something that would have been brought upon had the attorney general not pursued a similar case with low merit against the president a few years back."
The Federal Housing Finance Agency (FHFA), an independent federal agency that oversees Fannie Mae, Freddie Mac and the Federal Home Loan Bank System, sent a criminal referral to the Department of Justice Monday arguing the attorney general appeared to have falsified mortgage records to obtain more favorable loans.
At the heart of the case is a Norfolk, Virginia, home James purchased in 2023, which she identified on mortgage documents and a Fannie Mae/Freddie Mac form as a property that would serve as her primary residence, according to the FHFA letter dated Monday. James is legally required to live in New York as a statewide elected official in the Empire State, the letter adds.
Identifying a home as a primary residence versus a secondary home or vacation home comes with financial incentives, Debbas explained, because banks will offer lower interest rates to primary residences, with homeowners less likely to default on such loans compared to a second home.
"As a real estate attorney, we represent every major lending institution in the country," he said. "And a common underwriting requirement for banks is to solidify what the use of the property is going to be, meaning, is it a primary residence, second home or investment property.
"And the reason banks do that is that clearly there's a higher rate of default when it comes to investment properties and second homes as opposed to primary residences."
"The reason being is people, you know, don't want to leave their homes," he said. "Now, a second home investment property, you may be a little more inclined to throw the keys to the bank."
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The bank then requires the borrower to sign an affidavit confirming that the home being acquired will be used as a primary residence, he explained.
"Now, if that is not the intent or that is in fact inaccurate, and you sign that agreement, you are in fact committing mortgage fraud," he said. "And the bank relies on that agreement in giving you the loan. Now, would they have given you a loan if it were a second home? Potentially, but the difference is the interest rate would be significantly higher."
The bank's recourse when discovering such mortgage fraud related to misidentifying a property as a primary residence to obtain more favorable loan terms is "simply to call the loan," he said.
"They would call the loan, force you to pay it off by a certain date," he said. "If you're unable to sell the property or take other liquidity that you have to pay off the loan, they have the right to pursue a foreclosure action. They'd be legally granted this right. It would be very difficult to contest under those circumstances because, technically speaking, this is a default and this is fraud."
The New York City real estate attorney added that this type of fraud is common.
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"What extent is it fraud? To be quite honest with you, this is a very common thing that does take place in the real estate market," he said. "I'm not saying it's right. I'm not saying Letitia James … the full extent of the law shouldn't be applied to her. But it is something that takes place. Because if the loan is current, the bank hasn't really suffered any detriment, but it's still mortgage fraud. So that doesn't take away the fraud component to this."
Debbas argued this type of fraud does not rise to the level of criminal activity because the bank can call the loan, take back the property or force it to be liquidated.
James' office told The New York Times that a separate loan application for the 2023 Norfolk, Virginia, home purchase reportedly indicated she would not live at the property full time, and that her mortgage agreement did not require her to occupy the property as her primary residence.
James is a longtime political foe of Trump's who campaigned for the attorney general job in 2018 by vowing to aggressively pursue legal charges against Trump if elected, adding she'd expose the "con man" after her win that year.
Her office leveled nearly 100 legal challenges against the first Trump administration and added after his second presidential win in 2024 that she would continue challenging him in the courts to "defend the rights of New Yorkers and the rule of law."
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Most notably, James pursued a civil fraud case against Trump and the Trump Organization for inflating the values of properties to obtain more favorable loans, insurance coverage and tax deductions, which resulted in a $454 million judgment in 2024.
A spokesperson for James' office told Fox Digital Thursday that "multiple times during the attorney general’s trial against President Trump and the Trump Organization for years of financial fraud, President Trump’s attorneys repeatedly made the argument that the attorney general’s lawsuit was politically motivated.
"Every single time, the judge rejected that argument and even sanctioned the attorneys for making it," the spokesperson added. "Attorney General James won her lawsuit, and the judgment against President Trump now exceeds half a billion dollars."
Fox News contributor Jonathan Turley noted the irony of Trump's criminal referral over allegations of James fudging numbers to obtain more favorable loans after pursing Trump for something similar.
"This is a person who prosecuted Trump for everything short of ripping a label off a mattress, and among the charges that were brought in New York, in not just the civil but the criminal case, was making false or misleading statements to financial institutions," the legal scholar said on Fox News' "The Ingraham Angle" Tuesday. "As for James, if we apply the Letitia James standard that she created, there'd be little question here. This seems pretty straightforward."
The administration is looking into the allegations put forth by the FHFA while underscoring that "no one is above the law," White House spokesman Harrison Fields said on Newsmax Wednesday.
"With the Democratic Party, they love to throw stones in glass homes when they realize that they're committing the crimes that they're actually trying to go against," Fields said.
"So, this is now a criminal referral that the Department of Justice under Attorney General Pam Bondi will have to look at," he added. "The allegations from the FHFA are very serious. We're going to look at them, and no one is above the law. And Tish James, she'd like to say that about the president, but she should look in the mirror and realize that if you have skeletons in your closets about abusing the law and doing illegal things, maybe you shouldn't be purveying around like some justice queen, because you're not."
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The criminal referral also cited past reported issues with James' properties, including a 2001 purchase of a Brooklyn property. The certificate of occupancy lists the property as a five-unit residence, while James' mortgages list the property as four units.
Debbas explained that five-unit properties are identified as commercial properties, which would require a commercial loan that has higher interest rates than a residential loan. However, the banks carry the burden of confirming whether a building is commercial or residential.
"If the borrower has the ability to tell the bank or convince the bank that it's actually four units, it's to their financial benefit," he said. "Now, when you look at a certificate of occupancy, certificate of the occupancy is issued by the Department of Buildings, which tells you the legal use of the building.
"This is a five-family dwelling," he said. "Now, this is unequivocally a commercial property. The burden was on the bank to confirm this, but if the borrower did, in fact, have concrete knowledge … an argument can be made that mortgage fraud did take place in the application of this law."
James’ office told The New York Times a rider attached to the Brooklyn mortgage stated the building was four units, not five.
Debbas added that before the 2008 market crash, there was a lot of "shadiness" in the world of mortgages.
"As an elected official … there should be a heightened standard for honesty and obliging by your legal requirements not falsifying documents or committing fraud," Debbas said.
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While reflecting specifically on the Virginia home alleged mortgage fraud, he added, "Now, how would this impact her seating as attorney general of the state of New York? At the end of the day, that's going to be determined largely based on how many enemies she's created. But from a purely mortgage standpoint, it is certainly mortgage fraud, but, in my opinion, it does not warrant any criminal activity."
A spokesperson for James' office said Wednesday morning she has been "focused every single day on protecting New Yorkers, especially as this administration weaponizes the federal government against the rule of law and the Constitution. She will not be intimidated by bullies — no matter who they are," Fox Digital previously reported.