President Donald Trump is wielding a new tool in his fight against political and policy foes: alleging mortgage fraud.

New York Attorney General Letitia James on Thursday was indicted on charges of alleged bank fraud and making false statements to a financial institution regarding a mortgage loan.

That followed Trump’s allegation that Federal Reserve Governor Lisa Cook lied on a mortgage application, which he is using as grounds for attempting to fire her. Meanwhile, the Democrat who led Trump’s first impeachment trial, Senator Adam Schiff, is now under criminal investigation for similar accusations.

But this type of offence is rare, and it can be difficult to prove malicious intent.

That, in turn, may hurt federal prosecutors’ ability to meet Trump’s desire, as expressed in a recent social media post directed at Attorney General Pam Bondi, to win legal cases against James and Schiff, quickly.

Mortgage fraud is defined as deliberately misrepresenting or omitting information that borrowers give to a lender or underwriter to obtain a mortgage loan.

It can take multiple forms, such as misstating whether a property will be occupied or not, misrpesenting income, or inaccurately stating assets to qualify for a loan.

The Trump administration’s probes have focused on occupancy fraud, which includes claiming a home as a primary residence without actually residing in it.

“When people talk mortgage fraud, it’s a big picture,” said Kimber White, the president of the National Association of Mortgage Brokers, who has worked as a broker for 39 years.

“As far as occupancy fraud, it’s lower down on the totem pole.”

Neither comes up very often.

Only one in 116 mortgage applications in the second quarter of 2025 were considered at risk for fraud, according to data company Cotality. That represents less than 1%.

And occupancy fraud is not even the most common type of mortgage fraud, according to data from Fannie Mae, a government-sponsored entity that supports the US mortgage market.

Federal prosecutors say James, who last year won a massive civil case against Trump for mortgage and tax fraud, lied while applying for a loan on a three-bedroom home in Norfolk, Virginia. She allegedly said she would use the property as her secondary residence, but instead rented the house to a family of three as an investment property.

James said the charges were “baseless” and rights groups, such as the ACLU, swiftly condemned the indictment as an abuse of power.

So did Schiff, who called the case “another vindictive prosecution” against Trump’s political foes.

The California Senator is under federal investigation for allegedly telling banks that two homes in different states were both his primary residences, so that he could supposedly receive more favourable terms on loans. He has not been charged with a crime.

Similarly Cook, the Fed governor, has been accused of claiming a vacation house as her main residence on a mortgage application. She has denied any wrongdoing and sued to block Trump from firing her, saying he is seeking her dismissal because he disagrees with her stance on monetary policy.

In his social post addressing Bondi on 20 September, Trump pressed for charges against Schiff and James, as well as former FBI Director James Comey, to be filed soon, writing that “JUSTICE MUST BE SERVED, NOW!!!”

“There is a GREAT CASE, and many lawyers, and legal pundits, say so,” he also wrote.

However, proving that any of the three officials committed mortgage fraud could be hard, if not impossible.

Borrowers have a major incentive to lie on their mortgage forms, said Clifford Rossi, a finance professor at the University of Maryland, as lower interest rates can save them thousands of dollars a year.

But, at the same time, “mistakes can be made”, he added.

For example, a person taking out a loan with their adult son or daughter as a co-borrower might mistakenly check the “primary occupant” box on the mortgage form, even though they will not live there.

“It can be as honest as a clerical error,” Mr Rossi said.

The real possibility of honest mistakes makes it difficult to prove malicious intent, he said.

In his former role as chief risk officer in Citi’s consumer lending practice during the 2008-2009 financial crisis, Mr Rossi said his team identified a “relatively high” percentage of borrowers who they believed had committed mortgage fraud.

But attorneys advised him that claims against those borrowers would be hard to prove in court. His team did not move forward with any of the cases, he said.

“You get into these issues of, did you really mean to check this box or not?” he said.

The current director of the Federal Housing Finance Agency (FHFA), Bill Pulte, could also provide a wrinkle in prosecuting the officials.

He posted about Cook’s mortgage on social media and asked the justice department to investigate the mortgage applications. Some experts have argued he violated ethics rules and that, instead, FHFA’s inspector general, an internal and nonpolitical legal watchdog, should have made the referrals.