Exclusive-Trump appointee inspired by conservative media outlet to push for probe of Democratic congressman

By Chris Prentice and Marisa Taylor

NEW YORK/WASHINGTON, Dec 20 (Reuters) - A mortgage fraud probe of a Democratic congressman began last month after William Pulte, the Republican head of the Federal Housing Finance Agency, referred allegations from a conservative news site to his agency’s inspector general for possible ​criminal investigation, government emails seen by Reuters show.

On November 12, The Gateway Pundit published an article alleging U.S. Representative Eric Swalwell had improperly listed his Washington, ‌D.C., home as his “principal residence” on mortgage paperwork. Swalwell, a critic of President Donald Trump who represents a Northern California district and is now running for governor of California, an office that requires residency in ‌that state, has said he is a permanent resident of California. According to loan documents, however, Swalwell had listed his home in Washington as his "principal residence."

An email reviewed by Reuters shows Pulte sent a link to the article to the FHFA’s acting inspector general that day, urging him to take all appropriate action "including - if warranted -engagement with the Department of Justice regarding potential mortgage, tax or other fraud related to the representations made in mortgage documents or other items in the below article."

That same day, Pulte also referred the issue to ⁠the Justice Department, said a source familiar with the ‌matter who spoke on the condition of anonymity because they were not authorized to discuss the matter publicly.

The FHFA and Pulte did not respond to requests for comment. Pulte has previously defended the initiative, saying mortgage fraud undermines the U.S. housing market.

Ethics experts have criticized ‍Pulte’s tactics in seeking to target individuals for mortgage misstatements, historically rare prosecutions.

The Gateway Pundit contributor who wrote the article said he is "happy to see more coverage" of the issue. A spokesperson for the Justice Department declined to comment.

Banks generally offer lower interest rates to principal residences when compared to vacation homes or investment properties, allowing owners to save money on mortgage payments.

REFERRAL ​FITS BROADER PATTERN

The allegation against Swalwell echoes those Pulte has leveled against several prominent Democrats and public officials, including New York Attorney General Letitia James, U.S. Senator ‌Adam Schiff of California and Federal Reserve Board Governor Lisa Cook. All have come under sharp fire from Trump, a Republican, in his fierce campaign against perceived opponents.

"This has been part of the broader pattern of the politicization of the Department of Justice. It’s highly unethical to try to go after political enemies like this," said Richard Painter, the chief White House ethics lawyer under former Republican President George W. Bush.

"It's an abuse of public office and an abuse of public trust."

A congressional watchdog this month said it will open a probe to examine if Pulte abused his authority as he circumvented the FHFA's traditional investigative process in what critics say are politically motivated attacks.

The ⁠FHFA office of inspector general typically investigates mortgage fraud and refers matters to criminal prosecutors ​as needed, but Reuters previously reported Pulte has bypassed that office in making such referrals.

The communications between ​Pulte and the FHFA OIG were obtained by Democracy Forward, a legal organization with prominent Democrats on its board, and reviewed by Reuters.

Swalwell in late November pushed back, suing Pulte and the agency for violating his privacy in retrieving his mortgage records and for retaliating against ‍him for exercising his First Amendment rights.

In the ⁠lawsuit, Swalwell has said that he is a permanent resident of California and "disclaimed any intent to occupy the District of Columbia home as his primary residence in a sworn affidavit attached to his mortgage agreement."

"Trump and his team's allegations against me are nonsense,” Swalwell told Reuters in a statement. "Pulte’s newly revealed ⁠conduct only reinforces why I brought this case. I intend to see it through."

A federal judge has dismissed a fraud case against New York Attorney General Letitia James that emerged from Pulte's referral, and ‌two subsequent grand juries have declined to indict her again. James and the other targets of Pulte’s mortgage fraud campaign have denied wrongdoing.

(Reporting by ‌Chris Prentice and Marisa TaylorAdditional reporting by Sarah N. Lynch; editing by Diane Craft)