Occupancy Fraud

Posted on 11:27 AM | By Smart Wealth Advisory | In

If you’re a real estate investor, or simply own more than one property, it’s imperative that your bank statements are mailed to your primary residence each month. If you claim one house to be your owner-occupied property, but your bank statements and other financial materials are currently going to another one of your properties, the underwriter will surely question the occupancy, and your mortgage application will likely be declined.

In the eyes of the bank and the investor, it doesn’t make sense for a borrower to send bank statements, cable bills, and other financial statements to a property they don’t occupy for the sheer reason it wouldn’t make sense if you didn’t live there.

This is actually a huge red flag investors look out for to avoid buying securities that are tangled up in occupancy fraud. And for this reason, banks and lenders will likely decline a file if it’s listed as owner-occupied, or counter the borrower to submit the loan as an investment property.

Many borrowers submit a loan application listing one property as their primary residence, and when conditioned to provide verification of assets, they use bank statements from another property and the file gets declined for occupancy fraud.

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