Supersedes Working Paper 15-45 - Owner Occupancy Fraud and Mortgage Performance. A previous version of this working paper was originally published in December 2019. 

Unlike previous work, we show fraud was broadly based and appeared in the GSE market and bank portfolio loans, not just private securitization; accounting for that fraud increases the effective investor share by more than one-third. Occupancy fraud allowed riskier borrowers to obtain lower interest rates, and we show that fraudulent borrowers performed substantially worse than similar owner occupants and declared investors, constituting nearly one-sixth of the share of loans in default by the end of 2008. Their defaults were also much likelier to be “strategic.”