FHFA Conflict: Internal Watchdog Accuses Housing Regulator of Blocking Access

The Federal Housing Finance Agency refused to provide records to its internal watchdog, obstructing congressionally mandated reviews of its oversight of Fannie Mae, Freddie Mac, and other housing lenders.

The conflict between the agency and its Office of Inspector General escalated in October 2026, following a pattern of administrative actions taken by the regulator's leadership.

Bill Pulte, the Trump-appointed director of the FHFA, assumed his role in March 2025. Shortly after his confirmation, he appointed himself chairman of the boards for both Fannie Mae and Freddie Mac. He subsequently removed the agency's acting inspector general and reduced the workforce at the regulator and the government-backed mortgage businesses by hundreds of employees.

In early October 2026, the FHFA notified the inspector general's office that it was drastically reducing the office's funding. Staff members were told that as much as 80 percent of the workforce, or about 80 people, would be cut. James Hodge, the acting head of the OIG, informed lawmakers earlier in the month that the office would struggle to perform its duties under the new budget. The FHFA defended the reductions by stating that the OIG's budget and headcount were larger than those of other regulatory bodies.

A report prepared by the OIG earlier in October 2026 alleged that the agency interfered with its independence. The document stated that the FHFA refused to provide records and information in response to requests during at least three separate evaluations. One of these evaluations concerned the agency's oversight of a lender involved in multifamily loans that defaulted in June 2024. The report described this obstruction as unprecedented. It noted that this is the first time in at least a decade that the office has flagged an instance of FHFA interference in its semiannual reports to Congress.

The OIG's general counsel attempted to resolve the issue by showing documentation of its congressionally mandated responsibilities. The report stated that the OIG is entitled to access all records. An understanding regarding the role of the watchdog was reached in mid-August 2026. Two weeks later, the FHFA notified the inspector general of the funding cuts. The report characterized the abrupt reduction in funds as an extreme escalation of the agency's challenge to the OIG's authority.

The FHFA sent the report to lawmakers on Friday. A spokesperson for the agency called the OIG's allegations incorrect. The spokesperson stated that the agency has readily produced information and cooperated with its watchdog. The agency reported that staff completed 56 document requests and attended 16 separate hour-long meetings for three recent reviews. The spokesperson added that the FHFA is proud of its record of respecting the independence and role of the OIG.

The FHFA oversees the Federal Home Loan Banks as well as Fannie Mae and Freddie Mac. These government-sponsored enterprises have been under FHFA direct oversight since the 2008 financial crisis. They underpin the US housing market by backing the majority of all mortgages. Under Pulte, the agency has taken steps to target perceived opponents of the president. This included criminal referrals for alleged mortgage fraud against Federal Reserve Governor Lisa Cook and New York Attorney General Letitia James. Both officials denied wrongdoing. Pulte defended the allegations as efforts to root out fraud in mortgage markets.

OIG leaders have been discussing ways to stave off the mass job cuts with lawmakers since Hodge's warning. Staff have received furlough notices and have been told to prepare for reductions. The latest report to Congress serves as a formal communication from the acting leader of the OIG regarding the state of the office.