Are you wrong to not commit mortgage fraud on that investment property?

I think when the stated income or no doc loans emerged it really hurt our market.  I have no hard proof on stats but I would say a good majority of the foreclosures here are "investor owned" when they were stating that they would occupy the property.  That is fraud also. 

Why doesn't the individual just get a investment loan.  Is it because they have to put more money down? Or, is the interest rate lower? Would PMI be higher? Or, would the bank decline them if they knew it was a investment property?

If they mislead the bank to get something it would not willingly give to them, they have both lied and stolen.  Aside from the legal issues covered under title 18 US code section 1001 and 1010, they are essentially saying their intergrity is worth whatever the pitance they would save by either avoiding some down payment, or paying some nominal amount less per month.

In my expereinces, I have found when people are faced with the prospect of committing loan fraud it is because the details were not explained or explored until the day of closing when they perceive it is too late, and they feel pressured into signing because of the stigma of inconveniencing the other involved parties or believe there are no alternatives.  The shame is that too often a mortgage broker thought they were doing this individual a favor by setting up the loan this way, and most people would not willingly ask to lie or steal.

As for me, I have no interest in making money off lies or theft.  So, when I am astute enough to identify it I make sure it does not happen.

Christine - please join & post this to the mortgage fraud blog as well. http://activerain.com/groups/fraud

This is by far the most widespread type of mortgage fraud - fraud for property, right along with mis-stating income, job credentials, etc. When the market is good, it's the least damaging of the frauds because buyers get into a home, 2nd home or investment property and usually make the payments and keep up with it. When the market heads south that's when all the ugly little fibs crawl out of the paperwork and come back to haunt them.

Our group is more concerned with fraud for profit - which is less pervasive than these little lies, but usually far more costly.