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What is occupancy fraud?
Occupancy fraud is when you lie about being an owner occupant when you are not. For example, if you are currently a renter and use your name to purchase a home for a relative and say you will be an owner occupant but have no intention of living there, you are committing occupancy fraud. Also, if you are currently living in a home and lie about that you are planning on buying another home an use it as an owner occupant home but have no intention in occupying the home as your principal residence and want to rent out the home after you purchase it, you are committing occupancy fraud. The reason many home buyers are tempted in lying about being an owner occupant is because with owner occupant mortgage loans, the down payment can be very minimal. FHA loans only require 3.5% down payment and with conventional loans, the down payment for owner occupant mortgage loans is only 5% down payment. You cannot get second home loans or investment home loans with FHA loans. Conventional loans require 10% down payment for second home mortgage loans and 20% down payment for investment home loans.

Here is an article I recently wrote about occupancy fraud.

Occupancy fraud is a part of mortgage fraud where you lie about being an owner occupant on a property purchase where in fact you are not. Committing occupancy fraud is a felony and even though it just seems like a white lie where it does not hurt anyone, mortgage regulators and the FBI as well as HUD investigators take occupancy fraud extremely seriously. Occupancy fraud occurs when a home buyer cannot qualify for a mortgage loan and gets a family member or friend to say that they are purchasing a home and the person purchasing the home lies that they will be an owner occupant. This is also a case of a straw buyer where it is also a felony and part of mortgage fraud. Occupancy fraud occurs when a home buyer is buying an investment home and says that he or she will be an owner occupant but in fact has no intention in living there.

Here is another article on occupancy fraud.


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