BROWSE

Occupancy Fraud

What is 'Occupancy Fraud'

A type of mortgage fraud, whereby the borrower lies about whether or not the home will be owner occupied. Occupancy fraud happens when the borrower says that a home will be owner occupied, when in reality it will not be. Mortgage lenders typically offer lower rates to mortgages on owner-occupied homes, rather than investment properties. When occupancy fraud occurs, banks take on too much risk because they are receiving a lower interest rate than they should be for the delinquency risk that exists.

Explaining 'Occupancy Fraud'

Lenders typically charge higher rates on mortgages for non-owner occupied homes, because of higher delinquency rates. Delinquency rates are often lower for the owner-occupied home because people do not want to lose their private residence and become homeless. There is a lot less attached to losing an investment property.


Further Reading


Owner occupancy fraud and mortgage performance
papers.ssrn.com [PDF]
… occupant being a fraudulent investor … owner occupants and declared investors imply that the fraudulent investors' mortgage defaults may have been strategic … demonstrate one important role that occupancy fraud played during US housing boom and bust. Page 18. 17 …

Ten Years of Evidence: Was Fraud a Force in the Financial Crisis?Ten Years of Evidence: Was Fraud a Force in the Financial Crisis?
papers.ssrn.com [PDF]
… occupant being a fraudulent investor … owner occupants and declared investors imply that the fraudulent investors' mortgage defaults may have been strategic … demonstrate one important role that occupancy fraud played during US housing boom and bust. Page 18. 17 …

The social ecology of speculation: Community organization and non-occupancy investment in the US housing bubbleThe social ecology of speculation: Community organization and non-occupancy investment in the US housing bubble
journals.sagepub.com [PDF]
… occupant being a fraudulent investor … owner occupants and declared investors imply that the fraudulent investors' mortgage defaults may have been strategic … demonstrate one important role that occupancy fraud played during US housing boom and bust. Page 18. 17 …

Mortgage origination fraud and the global economic crisis: A criminological analysisMortgage origination fraud and the global economic crisis: A criminological analysis
onlinelibrary.wiley.com [PDF]
… occupant being a fraudulent investor … owner occupants and declared investors imply that the fraudulent investors' mortgage defaults may have been strategic … demonstrate one important role that occupancy fraud played during US housing boom and bust. Page 18. 17 …

Tunneling, Fraudulent Financial Statements and Regulation Effects: Chinese EvidenceTunneling, Fraudulent Financial Statements and Regulation Effects: Chinese Evidence
www.tandfonline.com [PDF]
… occupant being a fraudulent investor … owner occupants and declared investors imply that the fraudulent investors' mortgage defaults may have been strategic … demonstrate one important role that occupancy fraud played during US housing boom and bust. Page 18. 17 …

A Relationship Among Neighborhood Traits, Home Sales and Mortgage Fraud: The Atlanta Market Leading Into the Mortgage Crash of 2008A Relationship Among Neighborhood Traits, Home Sales and Mortgage Fraud: The Atlanta Market Leading Into the Mortgage Crash of 2008
scholarworks.boisestate.edu [PDF]
… occupant being a fraudulent investor … owner occupants and declared investors imply that the fraudulent investors' mortgage defaults may have been strategic … demonstrate one important role that occupancy fraud played during US housing boom and bust. Page 18. 17 …

An Insight into the World of Mortgage Fraud in the US and UKAn Insight into the World of Mortgage Fraud in the US and UK
search.proquest.com [PDF]
… occupant being a fraudulent investor … owner occupants and declared investors imply that the fraudulent investors' mortgage defaults may have been strategic … demonstrate one important role that occupancy fraud played during US housing boom and bust. Page 18. 17 …

Fraudulent income overstatement on mortgage applications during the credit expansion of 2002 to 2005Fraudulent income overstatement on mortgage applications during the credit expansion of 2002 to 2005
academic.oup.com [PDF]
… occupant being a fraudulent investor … owner occupants and declared investors imply that the fraudulent investors' mortgage defaults may have been strategic … demonstrate one important role that occupancy fraud played during US housing boom and bust. Page 18. 17 …



Q&A About Occupancy Fraud


How can you avoid occupancy fraud?

You can avoid occupancy fraud by making sure that your loan application states clearly whether or not you intend to occupy your new property as your primary residence.

What happens when occupancy fraud occurs?

The lender takes on too much risk because they are receiving a lower interest rate than they should be for the delinquency risk that exists.

Why do lenders charge higher rates on mortgages for non-owner occupied homes?

Lenders typically charge higher rates on mortgages for non-owner occupied homes, because of higher delinquency rates. Delinquency rates are often lower for the owner-occupied home because people do not want to lose their private residence and become homeless. There is a lot less attached to losing an investment property.

What is occupancy fraud?

Occupancy fraud is a type of mortgage fraud that occurs when the borrower lies about whether or not the home will be owner occupied.