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The definition, rules and penalties of occupancy fraud

On Behalf of | Aug 4, 2023 | Criminal Defense |

Fraud can occur in a number of different circumstances during the sale and purchase of a Colorado home. Many people have heard of fraud that involves sellers, such as failure to disclose and breach of duty. However, several types of fraud may be perpetrated by buyers, including a form of mortgage fraud known as occupancy fraud.

Occupancy fraud defined

If you get a mortgage loan and intentionally lie about the occupancy status of the property, you’re committing the crime of occupancy fraud. This type of fraud occurs when the borrower says that they will occupy the property, but they have no intentions of doing so.

A borrower might do this to get a lower interest rate on their mortgage loan. Many mortgage lenders offer lower interest rates for owner-occupied property. That encourages some borrowers to take advantage of the situation by lying.

Owner-occupied homes are safer for lenders because the property is less likely to go into default. The low risk of default often results in lower loan interest rates.


As a rule, occupancy fraud is a crime only when the deception is intentional. Living in the home for at least a year or longer can prove that the owner has or had plans to occupy the home. It’s possible that something happened that required the owner to live somewhere else. A situation such as this is unlikely to count as occupancy fraud.

Generally, moving out of the home doesn’t count as occupancy fraud as long as the borrower has a valid reason for moving. But if the borrower never planned to occupy the property and said that they did, that’s fraud.


A Colorado borrower facing an occupancy fraud charge will likely need a good criminal defense. Occupancy fraud is generally charged as a felony, and punishment depends on the circumstances of the offense.

The thought of getting a low-interest rate on a mortgage loan is appealing. However, lying to get that lower rate can cause serious legal trouble with long-lasting consequences.

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