New York Attorney General is facing charges of mortgage fraud for allegedly providing false information on an application to obtain favorable loan terms.
The Justice Department alleges that James misrepresented a home she owns in Norfolk, Virginia, as a second residence when, in reality, she has been renting it out to relatives. James has pleaded not guilty to the charges, and there could be one issue that might allow her to walk free, according to Politico:
The politically charged mortgage fraud indictment against New York Attorney General Letitia James accuses her of lying to lenders in order to get a favorable loan rate on a second home. She then rented the property, the indictment alleges, in violation of the terms of the loan she obtained.
But there’s a glaring issue with that accusation: The mortgage contract James signed does not prohibit renting out the house, according to POLITICO’s review of the contract and legal and real estate experts. In fact, the key language in the contract expressly allows renting under certain conditions.
That potentially fatal flaw in the indictment is one among several problems critics have identified in the case against James, a Democrat who sued Donald Trump and secured a multi-million dollar judgment that was later thrown out. James’ allies have criticized the indictment as political vengeance.
In a five-page indictment, James is charged with two counts of financial fraud in connection with her 2020 purchase of a three-bedroom house in Norfolk, Virginia. Lindsey Halligan, Trump’s handpicked top federal prosecutor in the Eastern District of Virginia, alleges James signed a “Second Home Rider” contract that prohibits renting the property. James then rented out the home anyway, in violation of those loan terms and federal bank and mortgage fraud laws, according to the indictment.
POLITICO obtained James’ mortgage documents, including her signed “Second Home Rider” from the Norfolk Circuit Court Clerk’s Office. The rider, a standard addendum to mortgage contracts developed by Fannie Mae and Freddie Mac, requires James to “maintain exclusive control over the occupancy of the Property, including short-term rentals.” The idea is to restrict buyers’ ability to use a “second home” as an “investment property” — by hiring a management company and using it primarily to generate income — after obtaining the lower loan rates associated with houses purchased as vacation or “second” homes.
That final, three-word phrase in the rider — “including short-term rentals” — could be decisive. In plain English, the provision means that James is explicitly permitted to rent the place out periodically, so long as she remains in charge of matters such as the number of tenants and how they use the property, legal experts say. The contract’s restrictions bar James from giving “a management firm or any other person or entity any control over the occupancy or use of the Property.”
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Letitia James is a total phony. She is NOT a civil rights leader NOR a black preacher, she is just pretending since she is feeling the heat under FBI investigation. As I have documented, Letitia James is a repeat mortgage fraudster and a slumlord who feels she is "above the law". pic.twitter.com/o4uKhWx3Li
— Joel Gilbert (@JoelSGilbert) May 9, 2025
The Justice Department alleges that James used the house “as a rental investment property” because she rented it out to family members. However, she did not enlist a property management company to manage the rental.
Prosecutors will have to secure a conviction by proving her intent to knowingly defraud the bank that issued the loan. They argue that the attorney general knew she was not allowed to rent out the property under these terms and highlight how the initial loan application listed the property as a “second home” while she characterized it as “rental real estate” with “zero personal use days” on her tax filings.
It’s also worth noting that the family members have been renting the home for at least five years. It might be hard for the defense to argue that this constitutes a “short-term” rental. Still, the prosecution might have an uphill battle as cases such as these rarely result in convictions — especially for those in powerful positions.
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