Definition of Occupancy Fraud
It is a variety of mortgage fraud, whereby the client lies about whether or not the house will be owner-occupied.
Brief Explanation of Occupancy Fraud
Occupancy fraud happens when the client says that a house will be owner-occupied when in reality it will not be. Mortgage creditors usually offer reduced prices to loans on owner-occupied houses, rather than financial commitment qualities. When occupancy fraud happens, banks take on too much risk because they are receiving a reduced interest amount then they should be for the misbehavior risk that exists. Lenders usually charge greater prices on loans for non-owner filled houses, because of better misbehavior prices. Delinquency prices are often reduced for the owner-occupied house because people do not want to lose their own residence and turn into homeless. There is a lot less attached to losing a smart financial commitment residence. The most everyday sort of mortgage fraud, occupancy fraud usually happens because borrowers can usually get reduced mortgage loan prices on loans involving owner-occupied houses. Mortgages for financial commitment qualities are usually more expensive because the default amount on them is usually greater. It is worth noting that making fake or deceptive statements on a mortgage claim is a central crime that comes with considerable penalties, including imprisonment and a decimated credit score. Additionally, if a lender discovers occupancy fraud, it can seize the exact residence and call the loan, making it due and payable immediately.