Senators Call for Investigation into FHFA’s Actions at Fannie Mae and Freddie Mac

WASHINGTON, D.C. — Ten Democratic senators are calling for an independent investigation into the Federal Housing Finance Agency‘s (FHFA) recent changes at the country’s largest mortgage companies, Fannie Mae and Freddie Mac. The request, primarily led by Senators Elizabeth Warren of Massachusetts and Andy Kim of New Jersey, was formally presented in a letter to FHFA inspector general Brian Tomney on Tuesday.

The inquiry stems from FHFA director Bill Pulte’s controversial decision to dismiss most existing board members of both Fannie Mae and Freddie Mac, following his own installation as the director of both entities. The lawmakers are urging the inspector general to assess whether Pulte and the FHFA leadership complied with applicable federal laws and internal policies during these significant staffing changes.

“It is vital to determine if the FHFA adhered to all relevant laws and procedures,” the senators stated, emphasizing the agency’s crucial role in the U.S. housing finance system. “Clarity in the operations of Fannie Mae and Freddie Mac is essential to maintaining stability in the mortgage market,” the letter read.

Fannie Mae and Freddie Mac play a pivotal role in processing the majority of the nation’s mortgages by packaging them into securities for investors. Any disruptions within these institutions could have far-reaching effects on the housing market.

In addition to the restructuring of the boards, the senators also requested Tomney to investigate the recent layoffs of approximately 100 employees at Fannie Mae. Pulte characterized these dismissals as stemming from fraudulent activities, including instances where employees were reportedly conducting secondary jobs in overseas locations and allegedly receiving kickbacks through a charity run by the agency.

“It is critical that federal employees not engage in unethical or illegal conduct,” the letter continued. “FHFA should take robust measures to prevent fraud and disciplinary actions against any employees who breach the law. Furthermore, it is essential for Congress to confirm that workforce reductions at the FHFA are compliant with all applicable laws and policies.”

Senators Tina Smith (D-Minn.), Ron Wyden (D-Ore.), Cory Booker (D-N.J.), Raphael Warnock (D-Ga.), Catherine Cortez Masto (D-Nev.), Lisa Blunt Rochester (D-Del.), and Kirsten Gillibrand (D-N.Y.) joined Warren, Kim, and Schumer in signing the letter. Schumer, who is the Democratic minority leader, reiterated the necessity of oversight and accountability within agencies charged with overseeing vital sectors like housing finance.

As of yet, a spokesperson for the FHFA has not provided any comment on the matter. However, a representative from the inspector general’s office confirmed receipt of the senators’ letter and stated that it would undergo a thorough review based on established internal processes.