Trump Moves to Oust Fed Governor Lisa Cook Over Mortgage Fraud Allegations
Federal Reserve Governor Lisa Cook is fighting back after President Donald Trump launched an effort to remove her from office, citing allegations of mortgage fraud. Cook, who has not been charged with any crime, has filed a lawsuit challenging the president’s attempt to fire her, raising the stakes in Trump’s broader push to assert control over the Federal Reserve.
The Allegations Against Lisa Cook
According to the administration’s claims, the issue centers on possible occupancy fraud tied to mortgages Cook held on two properties — one in Ann Arbor, Michigan, and another in Atlanta, Georgia.
Occupancy fraud occurs when a borrower falsely states that a property will be their primary residence in order to secure a more favorable mortgage. Such misrepresentation can lead to lower interest rates, smaller down payments, and easier credit approval compared to loans for second homes or investment properties.
The U.S. Treasury’s Financial Crimes Enforcement Network has previously identified occupancy fraud as the most common type of mortgage fraud during the mid-2000s housing bubble. A 2023 report from the Federal Reserve Bank of Philadelphia also noted that this type of fraud continues to persist well beyond the housing crisis.
Why Occupancy Fraud Matters
Borrowers who claim a property as their main residence often benefit from better loan terms because lenders view these mortgages as less risky. By contrast, loans for second homes or rental properties usually carry higher interest rates, stricter credit requirements, and shorter repayment terms.
“Declaring a property as your primary residence can make a huge difference in the loan terms you receive,” explained Jeffrey Buehner, a criminal defense attorney who has represented clients accused of white-collar crimes. While not involved in Cook’s case, Buehner noted that borrowers with second homes often face higher interest rates and tougher lending conditions.
Legal Consequences of Occupancy Fraud
Under federal law, occupancy fraud is considered a felony. Convictions can carry penalties of up to 30 years in prison and fines as high as $1 million.
However, experts say the actual punishment depends largely on the scale of the financial loss involved. Christine Adams, a former federal prosecutor who handled complex fraud cases, explained:
“The penalties are driven by the loss amount. Did the false statement influence the lender or a federal agency to make a loan they otherwise wouldn’t have? And was there significant financial loss as a result?”
In practice, prosecutors typically focus on larger cases with substantial losses before deciding to pursue charges.
How Prosecutors Could Build a Case
If Cook or anyone else were to face formal charges, the government would need to prove beyond a reasonable doubt that the misrepresentation was intentional. Prosecutors could rely on loan documents, emails, text messages, and testimony from those involved in the mortgage process.
Adams noted that prosecutors often connect lifestyle details to the alleged fraud. For example:
“If someone claims a home in one city as their primary residence but actually works, lives, and sends their kids to school in another, that can be used to show intentional misrepresentation.”
What Comes Next
For now, Lisa Cook has not been charged, and her lawsuit represents an effort to stop what she calls an unlawful attempt by President Trump to undermine the Federal Reserve’s independence. The case highlights the growing clash between the Trump administration and the central bank, while also raising questions about how mortgage fraud allegations are investigated and prosecuted in the U.S.