WASHINGTON—A senior federal employee sued the director of the agency that oversees housing-finance giants Fannie Mae and Freddie Mac , accusing Mel Watt of denying her a raise and promotion after she rejected his sexual advances.

Simone Grimes, a 44-year-old supervisory program management analyst at the Federal Housing Finance Agency, filed an equal-pay lawsuit Monday in a Washington-based federal court seeking damages, back pay and relief from claims of retaliation for previously filed internal complaints about the alleged conduct. Her complaints, which contain allegations similar to those in the lawsuit, have resulted in two government investigations.

The lawsuit alleges Mr. Watt asked Ms. Grimes to meet him outside the office to discuss her job responsibilities and repeatedly tied her advancement to his sexual interest in her. Ms. Grimes, according to the lawsuit, “was disturbed by what was unfolding, especially when put in context with Director Watt’s continued unwelcome and unwanted sexual advances towards her.” The suit alleged Mr. Watt “would contact her to meet with him; and when she agreed to meet with him in the hopes of discussing the pay equity issue, he would sexually harass her.”

Mr. Watt, 72 years old, has denied the allegations and called them politically motivated. “I am confident that the investigation currently in progress will confirm that I have not done anything contrary to law,” Mr. Watt said through a spokeswoman.

Politico reported some of the allegations against Mr. Watt in July.