My loan officer might be suggesting Mortgage Fraud

[Ryan Beckley]

“Well you can always just state your intent is to make it a primary residence. Once you get the property then whatever, life happens you may change your mind if you catch my drift” - this was followed by a laugh.

That’s what my lender said to me when I asked him if there were any loan options for less than 20% for a second home/investment property within the same city I live in. (Midwest college town) I used this same person for my primary residence about a year ago.

After reading online it appears to be mortgage fraud, but if life circumstances change it’s kind of a grey area

Is this actually an option? How risky is it if the loan officer is basically suggesting it. This would be a visible property on Airbnb. I wouldn’t have considered this as an option if the loan officer didn’t suggest it.

[Scott E.]

If your never intend to occupy the property, then you should not state that your intent is to occupy the property. Follow your gut here, this loan officer is misguiding you.

The grey area comes in if you buy the property with the intention of occupying it, then you do actually move into the property as planned, and then a few months later some unforeseen life circumstance comes up (death, divorce, out of state job offer, etc). That is the "life happens" scenario that is impossible to forecast when you are applying for a loan.

Loan officers are generally paid a very low base salary and the majority of their income is commission from actually writing loans. This is an example of a loan officer getting desperate during some slow times and blending the lines between legal and illegal.