Letitia James’ Mortgage Misclassification Just Got Worse

New York Attorney General Letitia James didn’t just misclassify her five-unit Brooklyn brownstone as a “4-family dwelling” on mortgage documents. As we’ve previously reported, this distinction is not trivial—properties with five or more units are considered commercial and subject to stricter lending rules. But our latest investigation reveals something even more troubling: on multiple occasions, James described the property as a “1-family,” “1–2 family,” or even “1–3 family” dwelling—designations that offer even greater mortgage advantages than the 4-family classification, including lower interest rates, reduced reserve requirements, and easier approval thresholds.

This isn’t a minor paperwork discrepancy. Five-unit buildings are classified as commercial properties under federal lending guidelines, subject to stricter underwriting standards, higher down payments, and less favorable terms. By repeatedly downgrading the unit count—sometimes to as low as a single-family home—James may have accessed residential mortgage products exclusively designed for primary residences with substantially more favorable terms.

The official Certificate of Occupancy for 296 Lafayette Avenue clearly and explicitly states “Five (5) Family Dwelling” in all capital letters. This official document, dated January 26, 2001, establishes the legal occupancy status of the building: View Certificate of Occupancy

Yet just two months after that Certificate of Occupancy was issued, James signed mortgage documents describing the property as a “One or Two Family” dwelling—the most aggressive misclassification possible, delivering the greatest mortgage advantages under residential lending programs.

New: FHFA Refers James to Justice Department

This investigation has real-world consequences. Following our extensive reporting on these discrepancies, the Federal Housing Finance Agency (FHFA) formally referred the matter to the Department of Justice for potential criminal investigation. This unprecedented federal criminal referral, dated April 14, 2025, is based largely on the evidence we’ve uncovered and published about mortgage misrepresentations — and today’s discovery of “1-family” designations represents yet another major development in the case.

Notably, as reported by The New York Times, the FHFA referral came just one day after former President Trump posted our story on Truth Social, calling James a “crook.” Bill Pulte, the head of the Federal Housing Finance Agency, subsequently posted on social media that his agency’s special agents work “around the clock to prosecute mortgage fraud,” adding, “There is no room for fraud in our mortgage markets. None. No one and no company is above the law.”

Standard mortgage underwriting procedures require title companies to verify the Certificate of Occupancy during the loan process, raising questions about how this discrepancy persisted across multiple lenders over two decades.

James’s Office Response Contradicts Documentation

The New York Times reports that a spokesperson for Attorney General James claimed “a rider attached to the mortgage clarified that the building was four units and agreed that she had said so consistently in paperwork.” This statement appears intended to dismiss concerns about unit misrepresentation as merely technical or administrative issues.

However, this response raises several troubling questions when compared to the extensive documentation:

1. Consistency Claim vs. Reality: Our investigation uncovered mortgage documents showing James represented her property as everything from a “One or Two Family” dwelling (2001, 2007, 2021) to a “1-3 Family Dwelling” (2006) to a “4 Family” dwelling (multiple filings between 2003-2019). This hardly constitutes “consistency” in paperwork.
2. Rider vs. Certificate of Occupancy: The official Certificate of Occupancy for 296 Lafayette Avenue clearly and explicitly states “Five (5) Family Dwelling” in all capital letters. This official document, dated January 26, 2001, establishes the legal occupancy status of the building. No mortgage rider can override this legal classification.
3. Dismissal as “Minor Error”: According to the New York Times, complaints filed with New York City’s Department of Buildings were dismissed, with one involving the unit count labeled a “minor error.” But that response raises a more troubling question: why isn’t the official Certificate of Occupancy being enforced in Letitia James’s case? The property has been legally classified as a five-family dwelling since 2001. Yet for over two decades, James has repeatedly described it as having four or fewer units in mortgage filings, building permits, and other legal documents. For ordinary New Yorkers, ignoring a Certificate of Occupancy can trigger steep fines, stop-work orders, and even criminal penalties. But in James’s case, the discrepancy is brushed aside—despite the significant financial advantages tied to underreporting the unit count. This isn’t a clerical oversight—it’s a clear pattern of preferential treatment.
4. Unaddressed Classifications: Most notably, James’s spokesperson failed to address the most problematic aspects of our findings—the multiple occasions where the property was classified as a “1-family,” “1-2 family,” or “1-3 family” dwelling, categories that provide the greatest mortgage advantages.

The Financial Impact: Real Dollars, Not Just Paperwork

The difference between 1-2 unit and 5+ unit classification isn’t merely technical—it has significant financial implications. According to industry sources, commercial mortgage rates for 5+ unit properties are typically 0.25% to 0.75% higher than residential rates with even steeper increases for properties requiring active management. Properties with at least 5 apartment units are zoned commercially, whereas properties with 4 units or less are classified as residential.

For investment properties, the financial impact is even more pronounced. Commercial loans typically come with higher interest rates and shorter loan terms than residential loans, which significantly raises monthly mortgage payments. Prior to Fannie Mae’s recent policy changes in November 2023, 2-unit properties required 15% down and 3-4 unit properties needed 25% down, compared to as little as 3% for qualifying 1-2 unit primary residences.

These differences translate into thousands of dollars in additional costs over the life of a loan. Even a modest 0.5% rate difference on a mortgage of this size can mean tens of thousands of dollars in extra interest payments over a 30-year term. Lenders view multi-family properties as higher risk investments, which is why they typically charge higher interest rates.

Potential Insurance Implications

Beyond mortgage fraud concerns, the unit count misrepresentation could potentially implicate insurance matters as well. Insurance companies set premiums and coverage terms based on accurate property classifications, with 5+ unit buildings requiring commercial policies that typically cost more and have different coverage parameters than residential policies for 1-4 unit buildings. By consistently representing her five-unit building as having fewer units (sometimes as low as a single-family dwelling), James may have secured more favorable insurance premiums and terms than the property legally qualified for. Such misrepresentations could potentially void coverage in the event of a claim, as insurance contracts generally contain provisions that invalidate policies based on material misstatements about the insured property. This would align with the broader pattern of classification discrepancies documented across mortgage applications, building permits, and financial disclosures.

Letitia James’ Shifting Story: Unit Counts on Her Mortgage Records

Over two decades, James’ property classifications fluctuated dramatically across multiple lenders—yet the building’s legal status remained consistently fixed as a five-family dwelling. The pattern reveals not just inconsistency, but a gradual evolution that maximized financial advantages:

• June 21, 2021: Citizens Bank NA – “Dwelling Only – 1 or 2 Family Residence or Dwelling”
• August 23, 2019: Citibank NA – “Dwelling Only – 4 Family”
• October 26, 2017: Wells Fargo Bank, N.A. – “Dwelling Only – 4 Family”
• January 26, 2015: The Municipal Credit Union – “Dwelling Only – 4 Family”
• August 23, 2011: US Bank NA, as Trustee – “4 Fam.” (handwritten)
• May 25, 2007: American General Home Equity, Inc. – “Property Improved by a 1–2 Family Residence or Dwelling”
• October 26, 2006: American General Home Equity, Inc. – “Improved by 1–3 Family Dwelling”
• July 1, 2005: MERS – “Dwelling Only – 4 Family”
• August 29, 2003: MERS – “Premises Improved by 4 Family Dwelling”
• March 30, 2001: Chase Manhattan Bank – “Premises Improved by One or Two Family”

Contextualizing the Timeline

Fannie Mae’s lending guidelines for multi-unit properties have evolved over time, but throughout the period from 2001 through 2023, they maintained distinctions between property types. These guidelines historically imposed stricter requirements for multi-unit properties, including higher reserve requirements and self-sufficiency tests for properties with three or more units. The requirements only changed in November 2023, when Fannie Mae announced more flexible terms for 2-4 unit properties, including lower down payment requirements and elimination of certain tests.

This change applies only to loans originated after November 18, 2023, and had no effect on the terms James received between 2001 and 2021.
Source: NJ Lenders Blog

Letitia James’s loans—spanning from 2001 to 2021—were all subject to the stricter rules. Thus, declaring the property as having fewer units than its official five-unit designation would have allowed her to potentially bypass various lending requirements regarding cash reserves, income verification, and down payment amounts.

Final Thought

Letitia James secured a $355 million judgment against Donald Trump for allegedly misrepresenting assets in financial documents. Yet our investigation has uncovered what appears to be a decades-long pattern of similar misrepresentations on her own mortgage applications—sometimes declaring a five-unit building as a single-family home, potentially securing much more favorable mortgage terms than the property legally qualified for.

The ongoing disconnect between official documentation and James’s office’s public statements further underscores the need for a thorough investigation. The principle that ‘no one is above the law’—frequently invoked by James herself—carries a simple truth: accountability applies to everyone, even those tasked with enforcing the rules.

Written by,

Sam Antar
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