What does non-occupancy fraud involve?

Non-occupancy fraud specifically involves borrowers misrepresenting their intentions regarding the use of a property. In this context, it typically occurs when individuals declare they will use a property as their primary residence while their actual intention is to rent it out. This misrepresentation can affect mortgage terms and interest rates, as lenders generally offer better rates for owner-occupied properties compared to investment properties. As a result, this type of fraud can lead to significant financial ramifications for both the borrower and the lender.

The other options address different types of fraudulent activities related to mortgages but do not specifically match the definition of non-occupancy fraud. For example, falsifying income pertains to misrepresenting financial information to secure a loan, while applying for multiple mortgages under different names focuses on identity fraud. Acquiring properties without loans does not involve fraud in the same manner, as it refers more to the absence of financing rather than the intent of occupancy. Therefore, the correct understanding hinges on the intent of living in the property versus renting it out, which perfectly encapsulates non-occupancy fraud.