EthicsQuestion 285 of 400
A borrower buying a second home tells the loan officer she will live in it as her primary residence to obtain a lower rate, though she plans to rent it out. This is an example of what type of mortgage fraud?
a.Appraisal fraud
b.Straw buyer fraud
c.Occupancy fraud
d.Identity theft
Explanation
Misrepresenting how a property will be used (owner-occupied vs. investment) to obtain better loan terms is occupancy fraud, because occupancy status affects pricing and eligibility. Appraisal fraud involves inflating value, straw buyer fraud uses another person's name to hide the true buyer, and identity theft uses another person's information without consent.
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- An applicant submits altered pay stubs showing $8,000 monthly income when he actually earns $4,000. What type of fraud is this?
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