Mortgage lenders particularly like borrowers who live in their homes.
This principle — which is why banks usually offer buyers of primary residences lower interest rates than those buying vacation homes or investment properties — sits at the center of President Trump’s demand on Tuesday that a Federal Reserve governor, Lisa Cook, resign.
According to Bill Pulte, the director of the Federal Housing Finance Agency, Ms. Cook obtained a $203,000 loan on a property in Ann Arbor, Mich., in 2021 and declared her intent to make it her primary residence. Two weeks later, according to a letter he posted on social media, she purchased an Atlanta condominium with a $540,000 mortgage and said that it would be her primary residence. The following year, the letter added, she listed the Atlanta condo for rent.
Mortgage lenders want to know if you intend to use a property as your primary residence. Generally, the best interest rates and loan terms (say, a 30-year mortgage instead of a shorter one) go to those people. If it is your one and only home, you are likely to do everything you can to make the payment each month.
Lenders will often charge a higher interest rate for a second home or a property you intend to use as a rental since the risks there are higher. If you run into financial trouble, after all, you will be more likely to stop making payments on the rental property than on the home where you live.
To Mr. Pulte, it “appears” that Ms. Cook has “falsified bank documents and property records” to get a better deal. A spokeswoman for the Fed did not respond to a request for comment, nor did Ms. Cook.
According to Rocket Mortgage, one of the biggest lenders in the United States, you can’t have two primary residences. People’s life circumstances can change quickly though, and it is fine to rent out your old home after purchasing a new one if the mortgage allows that. You are just supposed to make lenders aware of your plans and changing circumstances.
It is not unusual for people in the public eye to find themselves the subject of real estate scrutiny. This year, documents emerged showing that Ken Paxton, the attorney general of Texas, declared three separate properties to be his and his wife’s primary residences. The Trump administration has lobbed similar accusations at New York Attorney General Letitia James and Senator Adam Schiff, Democrat of California.
Prosecutions of such matters tend to be rare, but it’s not unprecedented. Last year, Baltimore City’s former state’s attorney was found guilty of making a false mortgage application. In that case, the conviction hinged on the origin of the down payment funds.
Ron Lieber has been the Your Money columnist since 2008 and has written five books, most recently “The Price You Pay for College.”
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