Federal Housing Finance Agency Director Bill Pulte has slashed the agency's Office of Inspector General budget for fiscal year 2027 to $20 million, a 61.3% reduction from the previous year. Acting Principal Deputy IG James Hodge warned the cut will force 70% to 80% staff layoffs and shut down criminal mortgage fraud investigations. While the FHFA defends the move as peer-matching, congressional Democrats have called for Pulte's resignation, accusing him of unlawfully dismantling the watchdog to evade accountability.
Proposed budget cuts for the inspector general
- ▪Federal Housing Finance Agency Director Bill Pulte announced a $20 million budget allocation for the Office of Inspector General in fiscal year 2027, representing a 61.3% reduction from fiscal year 2026 funding levels.
- ▪The Trump administration's fiscal year 2027 budget request transmitted to Congress in the spring of 2026 had proposed $55 million for the Federal Housing Finance Agency Office of Inspector General.
Impact of budget cuts on staffing
- ▪The Federal Housing Finance Agency Office of Inspector General's staff includes approximately 40 special agents and three Special Assistant United States Attorneys who prosecute mortgage fraud.
- ▪The budget cuts will force the Federal Housing Finance Agency Office of Inspector General to reduce its staff by 70% to 80%.
Termination of criminal investigations
- ▪Since 2011, the Federal Housing Finance Agency Office of Inspector General's criminal enforcement program has resulted in more than 1,270 convictions and nearly $75 billion in monetary results.
- ▪The budget cuts will terminate the Federal Housing Finance Agency Office of Inspector General's criminal investigations of mortgage, bank, and other fraud, limiting investigations exclusively to administrative matters involving agency personnel.
Dispute over the budget size justification
- ▪Acting Principal Deputy Inspector General James Hodge stated that the office's budget is based on overseeing regulated entities with combined assets exceeding $7.8 trillion, rather than just the parent agency.
- ▪The Federal Housing Finance Agency stated the budget allocation peer-matched its Office of Inspector General to other offices, as its requested budget represents 16% of its operating budget versus a 2% average at other regulators.
Democratic backlash to the budget cuts
- ▪Senator Elizabeth Warren accused Federal Housing Finance Agency Director Bill Pulte of unlawfully shutting down the work of the inspector general during a congressional hearing on October 1, 2026.
- ▪Democratic leaders in Congress issued a joint statement on October 1, 2026, calling on Federal Housing Finance Agency Director Bill Pulte to resign over the budget cuts.
- ▪Democrats on the Senate Committee on Banking, Housing, and Urban Affairs sent a letter on October 1, 2026, demanding that Bill Pulte reverse the budget cuts.
Accusations of agency politicization
- ▪The Trump administration removed Joe Allen, the Federal Housing Finance Agency's acting inspector general, in November 2025 after congressional Democrats requested an investigation into the politicization of the agency.
- ▪In 2025, Federal Housing Finance Agency Director Bill Pulte accused President Donald Trump's perceived political adversaries, including Federal Reserve Governor Lisa Cook, New York Attorney General Letitia James, and California Senator Adam Schiff, of potential mortgage fraud.
Debatable claims
- ▪Slashing the FHFA watchdog's budget leaves the mortgage market vulnerable to fraud
- ▪The FHFA inspector general budget cuts are justified by peer-agency comparisons
- ▪Bill Pulte has politicized the FHFA by targeting political adversaries
- ▪FHFA Director Bill Pulte should resign over the inspector general budget cuts
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