Occupancy fraud occurs when a buyer applies for a mortgage to purchase or refinance an investment property but states on the mortgage application that they will occupy the property as their primary residence or as a second home. Fannie Mae estimates that about 19% of all mortgage fraud is now occupancy fraud, and increasing.
Borrowers commit occupancy fraud to receive more favorable terms on their mortgage. Investment properties have higher default rates and, therefore, lenders require larger down payments, higher interest rates, and stricter underwriting guidelines. Because of the greater risk of default and more favorable mortgage terms, lenders have a greater exposure to loss without sufficient return on their capital to cover this risk.
The FBI investigates all mortgage fraud. Penalties for mortgage fraud include imprisonment for up to 30 years, fines up to $1,000,000, or both.
Please contact me with any questions regarding your mortgage or to apply for a mortgage at BarkerLoans@gmail.com or 708.473.7688.
