Ethics · 18% of the SAFE exammedium
Correct answer: This constitutes occupancy fraud because the borrower misrepresented intended occupancy at the time of application
Occupancy fraud occurs when a borrower misrepresents at the time of application that the property will be owner-occupied when they actually intend to use it as a rental or investment property. The key is intent at the time of application — if the borrower never intended to occupy the property but represented it as a primary residence to receive favorable rate and down payment terms, this is fraud regardless of payment history. While genuine post-closing changes in circumstance may sometimes be defensible, evidence such as never moving in and immediate rental is strong evidence of pre-existing fraudulent intent.
CRAM ARCADE has the full NMLS question bank, timed practice exams, focus drills on your weakest category, flashcards and spaced repetition. No credit card.
Start studying free