Fannie Mae and Freddie Mac Exit New York Amid Tensions with State Attorney General

In a decisive move that signals growing friction between federal housing agencies and New York state leadership, the Federal Housing Finance Agency (FHFA) has announced plans to permanently close Fannie Mae and Freddie Mac offices in New York. This dramatic decision comes as a direct response to what sources close to the FHFA characterize as Attorney General Letitia James’ “corrupt and dangerous business practices” within the state. While the physical offices will close, both organizations will continue serving New York residents and providing mortgage loans throughout the state—albeit without maintaining a brick-and-mortar presence. Any existing leases will reportedly be subleased as part of this transition, reflecting a significant shift in how these critical housing finance institutions operate within one of America’s largest housing markets.

The closure represents the latest development in an increasingly contentious relationship between federal housing authorities and AG James, who has positioned herself as a prominent legal adversary to President Donald Trump since her 2018 campaign. James’ aggressive stance against Trump—she pledged to pursue legal charges against him during her campaign and her office filed nearly 100 legal challenges during his first administration—appears to have created ripple effects across federal agencies now under his second administration. Following Trump’s 2024 electoral victory, James doubled down on her position, asserting she would continue challenging the president in court to “defend the rights of New Yorkers and the rule of law”—a stance that has evidently not endeared her to federal housing authorities now answering to the Trump administration.

The situation intensified in May when the Department of Justice opened an investigation into James’ personal mortgages, following a criminal referral from FHFA chief Bill Pulte in April. The referral contained serious allegations that James had falsified mortgage records to secure more favorable loan terms. Central to these claims is a Norfolk, Virginia, home purchased by James in 2023, which she allegedly identified on mortgage documents and a Fannie Mae/Freddie Mac form as her primary residence—a potentially problematic declaration given that as a statewide elected official in New York, James is legally required to reside within the Empire State. The criminal referral also highlighted other reported irregularities with James’ properties, including discrepancies in the unit count for a Brooklyn property purchased in 2001, where the certificate of occupancy lists five units while James’ mortgages reportedly document only four—a difference that could meaningfully impact mortgage agreements.

James has vigorously denied any wrongdoing in response to these allegations. Her office previously told the New York Times that a separate loan application for the Norfolk property indicated she would not live there full-time, and that her mortgage agreement didn’t require her to occupy the property as her primary residence. James’ attorney, Abbe Lowell, characterized the criminal referral as merely “three pages of stale, threadbare allegations” in a letter to U.S. Attorney General Pam Bondi, suggesting it represented “the next salvo in President Trump’s revenge tour against Attorney General James” rather than substantive concerns about financial impropriety. Despite these denials, the FHFA appears unmoved in its decision to withdraw physical operations from New York.

The FHFA, which serves as an independent federal agency overseeing Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System, plays a crucial role in America’s housing finance infrastructure. These government-sponsored enterprises are vital to maintaining liquidity in mortgage markets and enabling affordable homeownership across the country. The decision to close New York offices suggests significant concerns within the agency about operating in the state’s current regulatory environment. While the FHFA source emphasized that New York residents would still be employed and mortgage loans would continue to be available to New Yorkers, the symbolic impact of this withdrawal from America’s financial capital cannot be understated.

This development highlights the intensifying intersection of politics and governance in America’s housing sector. As federal agencies and state authorities increasingly find themselves at odds along partisan lines, everyday functions of government—like ensuring stable housing markets and accessible mortgage financing—risk becoming collateral damage in broader political conflicts. The situation raises important questions about how essential services will continue to function amid growing tensions between different levels of government and what the future holds for federalism in housing policy. As both sides dig in, New York homeowners and potential homebuyers may find themselves caught in the middle of a power struggle that extends far beyond the technical details of mortgage applications and into the realm of institutional conflicts that could reshape federal-state relationships for years to come.