A semiannual report signed October 30 says the Federal Housing Finance Agency refused for months to hand over Fannie Mae and Freddie Mac records, then notified the office on August 31 that its next budget would be cut by roughly 64 percent. The agency says it is matching peer offices and has cooperated fully. The documents allow readers to test both claims.
The Office of Inspector General (OIG) at the Federal Housing Finance Agency (FHFA), the regulator and conservator of Fannie Mae and Freddie Mac, has told Congress that the agency it oversees blocked its access to records and then cut its funding so deeply that its criminal fraud program will shut down. The statements appear in the office’s Semiannual Report to Congress for April 1 through September 30, 2026, signed on October 30, 2026, by James Hodge, the Acting Principal Deputy Inspector General, Performing the Duties of the Inspector General.
“FHFA’s refusal to provide Enterprise records and information that OIG requested to conduct a review was unprecedented,” the report states (page 32). It adds that on August 31, 2026, “just one month before the beginning of the fiscal year,” FHFA told the office “for the first time” that it would reduce the fiscal year (FY) 2027 budget “by approximately 64% below the funding provided to the OIG in the President’s Budget for FY 2027” (page 56).
FHFA, led by Director Bill Pulte, rejects the obstruction charge. A spokesperson told Scotsman Guide that the agency has “delivered every document and engaged in every interview the IG has requested under its statutory authorities.” In a September 30 news release, the agency described the cut as a “Peer-Matched” budget meant “to ensure the budget is efficient and right-sized.”
What the coverage has mostly left out
Much of the coverage has centered on the political fight between Mr. Pulte and congressional Democrats. Three details in the primary documents get less attention.
First, the work that was stalled concerns taxpayer exposure, not personalities. According to the report’s footnote 2, two of the blocked evaluations examine how FHFA oversees Fannie Mae’s and Freddie Mac’s monitoring of the condition and value of apartment properties that secure their multifamily loans. The third is “a special project on the effectiveness of Fannie Mae’s loan review and approval processes, including its oversight of the lenders’ delegated underwriting, for six multifamily loans comprising a large portfolio that defaulted in June 2024.”
Second, the inspector general’s previous report complicates the timeline. The semiannual report covering October 1, 2025, through March 31, 2026, signed by a different acting official, Christian J. Schrank, contains a section titled “FHFA’s Refusal to Provide Information and Attempts to Interfere with OIG Independence.” Its entire text reads: “OIG has no instances to report for this period; therefore, we also have no related reports to the Agency head.” Yet the newer report says the office “first learned of the substantial change in the Agency’s position” on access “in early 2026,” a window that at least partly overlaps the earlier reporting period.
Third, the newest report shows that the access dispute was not the only friction. FHFA rejected 14 recommendations from an internal-threat security audit, did not say whether it agreed with 12 recommendations from a cloud-system audit, and disagreed with four recommendations from the annual information security audit. Those findings are covered in the deep dive below.
Background: who watches the housing regulator
Congress created FHFA in the Housing and Economic Recovery Act of 2008, the same law that established its inspector general. FHFA has served as conservator of Fannie Mae and Freddie Mac since September 2008, after the two companies failed during the financial crisis. It also regulates the 11 Federal Home Loan Banks. RSN has covered the long history of these entities, from the New Deal origins of Fannie Mae to FHFA’s 2015 push to change Federal Home Loan Bank membership rules.
The scale is large. The report states that as of June 30, 2026, Fannie Mae and Freddie Mac “collectively reported more than $7.85 trillion in assets,” and the Federal Home Loan Banks “reported approximately $1.44 trillion.”
The funding arrangement matters. The inspector general does not receive its own appropriation from Congress. The White House’s FY 2027 budget appendix for other independent agencies (page 1207) states: “The IG is funded through FHFA’s direct assessments on the housing GSEs,” meaning fees that FHFA charges the government-sponsored enterprises (GSEs). That leaves the regulator in a position to set the money available to the office that audits it.
Leadership at the inspector general’s office has been unsettled for a year. In November 2025, the administration removed Acting Inspector General Joe Allen. The MortgagePoint, summarizing Reuters reporting based on anonymous sources, said Allen was preparing a letter to Congress saying FHFA was not cooperating with his office when he was removed. Those claims came from unnamed sources and have not been confirmed on the record. Scotsman Guide reports that no replacement has been named; Mr. Hodge is performing the duties of the office.
Deep dive: what the report says, step by step
The access dispute
The report’s account (pages 31 and 32) runs as follows. The Office of Evaluations “had anticipated issuing at least three evaluation reports regarding FHFA oversight of the Enterprises during this reporting period.” None was completed “due to restrictions that FHFA imposed on OIG’s access to Enterprise records.” In the report, “the Enterprises” means Fannie Mae and Freddie Mac.
When FHFA questioned the office’s authority in early 2026, the inspector general’s lawyers sent a memorandum citing the Inspector General Act, which entitles an inspector general to “all records, reports, audits, reviews, documents, papers, recommendations, or other material available to” the agency that “relate to” its programs and operations (5 U.S.C. section 406(a)(1)(A)). The office’s argument is that because FHFA is both regulator and conservator, every Fannie Mae and Freddie Mac record is available to FHFA and therefore to its inspector general.
The report says: “Despite several requests, FHFA never responded to the memorandum and continued to deny access to requested information stating, among other things, that it extended beyond OIG’s oversight role.”
The office did not go to Congress at that point. “To avoid an impasse that would result in escalation of the access issue to Congress, OIG chose to engage in extensive accommodation discussions with FHFA,” it writes. In mid-August 2026, it says, the two sides reached “an understanding” that the office believed would allow the evaluations to be finished. The report confirms the office has “recently been given access to information sufficient to allow the evaluations to move forward,” but says “the access restrictions caused significant delay.”
The budget notice
Roughly two weeks after that understanding, on August 31, FHFA notified the office of the cut. Mr. Hodge’s opening letter says the reduction “slashes the $55 million estimate included in the President’s Budget for FY 2027.” The White House budget appendix confirms the figures for the office’s spending: $52 million actual in 2025, and $55 million estimated for both 2026 and 2027.
RSN’s calculation: a cut of about 64 percent from $55 million leaves roughly $19.8 million. That matches the “$20 million” figure Mr. Hodge gave lawmakers in a separate letter, as reported by The MortgagePoint on October 5. The semiannual report cites a September 30 notification letter to Congress posted by the Senate Banking Committee. RSN could not retrieve that letter directly and relies on the press account for its wording.
The report describes the consequences in plain terms (page 56): “The budget provided will force OIG to cut 70%-80% of its mission-critical workforce and will, at best, permit OIG to conduct only those audits that are required by statute.” It adds that “the investigative work that our specialized investigators conduct to identify, investigate, and prosecute fraud in the Enterprises will cease.” The opening letter says the office “must shut down our national criminal enforcement program” and eliminate the Office of Evaluations.
What the fraud unit produced in six months
The same report lists the investigative results the cut would end. For April through September 2026, the office reports 46 indictments or charges, 43 convictions or pleas, 24 sentencings and 147 referrals to FHFA’s Suspended Counterparty Program, which can bar people and firms involved in fraud from doing business with the GSEs. Court-ordered results totaled $29,480,769: $12,153,876 in criminal restitution and $17,326,893 in fines, special assessments and forfeitures. The cases include multifamily loan fraud, fraudulent short sales and fraud tied to Paycheck Protection Program loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Those results come from joint investigations with other agencies as well as the office’s own, and the report says so in a footnote. A smaller office would not necessarily lose all of them; federal prosecutors and other investigators would still pursue some mortgage fraud cases. But the report states that this office’s own fraud investigations “will cease.”
Rejected and unanswered recommendations
The audits section also shows the agency setting aside the inspector general’s findings. In audit AUD-2026-007, the office found FHFA’s “security controls were not effective in protecting its network and information systems against internal threats” and made 36 recommendations, which have not been released publicly for security reasons. A footnote on page 33 says the office “both issued and closed fourteen recommendations this semiannual reporting period based on the Agency’s rejection of those recommendations.”
In AUD-2026-006, on FHFA’s cloud system for governance, risk and compliance, which tracks hotline complaints referred by the inspector general, the office made 12 recommendations. “Agency management acknowledged receipt of the report but did not express agreement or disagreement with our recommendations,” the report says. In AUD-2026-004, the annual review under the Federal Information Security Modernization Act (FISMA), an outside accounting firm found the agency’s information security programs “were not effective” and made four new recommendations. “The Agency did not agree with the recommendations.”
Not every finding was negative. The office concluded that FHFA’s Division of Enterprise Regulation “designed and implemented effective oversight” of the GSEs’ multifamily credit risk transfer programs, and that FHFA’s oversight of Federal Home Loan Bank corporate governance was sufficient. Both reports made no recommendations.
FHFA’s case, and where it holds up
FHFA’s argument deserves a fair hearing, and part of it survives scrutiny. Its September 30 release says that after adopting zero-based budgeting, “the Agency became aware that FHFA’s OIG was an extraordinary budgetary outlier among its peer OIGs.” It states: “While the average Inspector General budget allocation is approximately 2% of its agency’s operating budget, the FHFA OIG requested 16%.” It also says the office’s headcount “represents 18% of FHFA’s total workforce, roughly FIVE TIMES the size of the average IG-Agency staffing allocation of 4%.”
RSN checked the 16 percent figure against the White House budget appendix. FHFA’s own direct spending for FY 2027 is estimated at $338 million; the inspector general’s $55 million is about 16.3 percent of that. On that measure, the agency’s arithmetic holds. The release’s separate claim that the office’s request was “nearly NINE TIMES higher than the average OIG budget” does not follow from its own percentages, which give a ratio of 8 to 1. The release does not explain how the “nine times” figure was calculated.
Analysis: The comparison has a weakness of its own. A typical inspector general oversees the programs of its own agency. This office’s remit, as the White House budget describes it, covers FHFA “in its capacity as the primary regulator of the housing Government-Sponsored Enterprises (GSEs) and conservator of Fannie Mae and Freddie Mac.” The report says its funding has been “directly benchmarked to the operational budgets and staffing of the Enterprises and FHLBanks” since its creation, meaning Fannie Mae, Freddie Mac and the Federal Home Loan Banks, not FHFA alone. The ratio also moves when FHFA shrinks. The same budget appendix shows FHFA’s full-time staffing falling from 714 in 2025 to an estimated 543 in 2026, a drop of about 24 percent, which by itself raises the inspector general’s share.
On access, FHFA told Scotsman Guide that three “recent reviews” required it to complete 56 document requests and 16 separate hour-long meetings. A spokesperson told Reuters that the agency “readily produced” information and that “FHFA is proud of its record of respecting the independence and role of the OIG and continues to do so.” Another FHFA representative wrote: “Independence does not mean exemption from fiscal accountability.”
Those statements and the report can both be partly true. Completing 56 document requests is consistent with refusing others; the report says the dispute was over a category of Fannie Mae and Freddie Mac records FHFA considered outside the inspector general’s role. Mr. Pulte has framed the fight as a matter of stewardship, saying in response to Senator Elizabeth Warren (D-Mass.) that she “wants to kill good financial stewardship to align our IG’s office with its peer IG Offices,” according to The MortgagePoint.
The political response
Democratic leaders reacted sharply. An October 1 joint statement from Senators Chuck Schumer, Elizabeth Warren, Dick Durbin, Gary Peters and Richard Blumenthal and Representatives Hakeem Jeffries, Maxine Waters, Jamie Raskin and Robert Garcia said “Pulte’s corrupt crusade to protect himself and President Trump from accountability will likely result in the firing of approximately 40 law enforcement personnel who protect families from mortgage fraud.” It called on him to resign. That statement is a political accusation; the semiannual report itself does not allege any motive for the cut.
RSN found no public statement from Republican leaders of the House Financial Services or Senate Banking committees on the report in the sources reviewed for this article. Reuters reported that this is “the first time in at least a decade” the office has flagged FHFA interference with its independence, based on its review of past semiannual reports.
Why this should matter to conservatives
Analysis: Fiscal restraint is a fair principle, and an inspector general’s office is not exempt from it. But the method matters. Fannie Mae and Freddie Mac have operated under government conservatorship for 18 years, with taxpayers standing behind trillions of dollars in mortgage exposure. Oversight of that exposure is exactly the kind of work that protects taxpayers, and the inspector general’s office was created to do it independently. A budget dispute between a regulator and its own auditor is better settled in the open by Congress than by a notice sent one month before the fiscal year begins, about two weeks after the inspector general believed the records dispute had been resolved.
RSN has covered several recent watchdog findings in this vein, including the Justice Department inspector general’s review of outdated informant rules and the General Services Administration inspector general’s finding that building security plans were open to all staff. Those offices can do that work only when they have records and funding.
What is established, disputed and not established
Established (from primary documents):
- The inspector general’s semiannual report, dated October 30, 2026, states that FHFA restricted access to Fannie Mae and Freddie Mac records and that three evaluations were not completed in the period.
- The report states FHFA notified the office on August 31, 2026, of a cut of about 64 percent below the $55 million in the President’s FY 2027 budget.
- FHFA’s September 30 release confirms the reduction and gives its 2 percent and 16 percent comparison; the 16 percent figure is consistent with White House budget data.
- FHFA rejected 14 recommendations from one security audit and disagreed with four from another, according to the report.
- The previous semiannual report, for October 2025 through March 2026, reported “no instances” of refusal or interference.
Disputed:
- Whether FHFA “refused” records (the inspector general’s position) or provided everything required under the law (FHFA’s position).
- Whether the inspector general’s statutory access reaches all Fannie Mae and Freddie Mac records through FHFA’s role as conservator.
- Whether “peer agencies” are the right benchmark for an office that oversees entities with more than $9 trillion in combined assets.
Not established:
- Any motive for the cut. The Democratic claim that Mr. Pulte acted to protect himself is an allegation, not a finding in the report.
- Why the spring 2026 report recorded no access problems if, as the fall report says, FHFA began questioning access “in early 2026.” The fall report’s account of choosing accommodation over escalation may explain it, but the office has not said so directly.
- The anonymous-source account of why Acting Inspector General Joe Allen was removed in November 2025.
- Whether the three evaluations, now able to proceed, will ever be published under the reduced budget.
What accountability would look like
- A public account from FHFA of which records it withheld, on what legal basis, and for how long, so Congress can judge the access dispute on the merits.
- Release of FHFA’s zero-based budget analysis, including the calculation behind the “nearly nine times” claim and the list of peer offices used.
- Committee hearings in House Financial Services and Senate Banking with both Mr. Pulte and Mr. Hodge, on the record and under oath.
- A structural fix from Congress, such as a separate appropriation or a funding floor for the inspector general, so that the regulator no longer sets its auditor’s budget.
- A Senate-confirmed inspector general. The office has been run by acting officials since November 2025.
- Publication of the three stalled evaluations, including the review of the six defaulted multifamily loans, so taxpayers learn what the delay cost.
Sources: FHFA OIG Semiannual Report to Congress, April 1 to September 30, 2026; FHFA OIG Semiannual Report to Congress, October 1, 2025, to March 31, 2026; FHFA news release, September 30, 2026; FY 2027 Budget Appendix, Other Independent Agencies; Reuters via West Hawaii Today, October 31, 2026; Scotsman Guide, November 2, 2026; The MortgagePoint, October 5, 2026; The MortgagePoint, November 4, 2025; House Financial Services Committee Democrats joint statement, October 1, 2026.
Image: Constitution Center, 400 Seventh Street SW, Washington, D.C., the address of the FHFA Office of Inspector General. Photo by Tim1965, licensed under CC BY-SA 3.0, via Wikimedia Commons.
How this article was made: Right Side News researched and drafted this article with the help of AI tools. Sources are linked so readers can check them. Spot an error? Tell us in the comments and we will correct it.