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And I think you need to back off.

And I think you need to reconsider what you think is "ethical."

If the loan was taken out years ago when the poster had every intention of living in the home as their primary residence and in fact did so for years, it is definately not fraud.

Very true. So long as he's living there, it's not fraud. But if he decides "not to tell the bank" because he thinks the bank might consider moving out and converting to rental a breach of contract, that's unethical.

Maybe the bank won't care. In fact, I think you're generally allowed to do this as long as you've lived there at least a year. But if you think it's material, and you're considering keeping it secret because it will affect your agreement, your intent is fraud.

Is honesty with a contractual partner such a difficult concept to understand?

First of all you called it fraud, a legal term. It is not fraud.

Now you switch to unethical. What is unethical is more subjective. The contract and agreement probably says something to the effect of intend to live their as your primary residence and maybe even has some stipulation about at tleast one year. In both cases he has lived up to his side of the contract regarding these items.

If the contract says you must notify them if he ever decides to move or rent the property then I agree he is bound to do so. But if it does not I do not beleive the person is ethically bound to notify them nor being dishonest by not doing so. Just because someone in a contractual obligation would be an interested party does not, in my opinion, create an ethical obligation to notify. They might be interested if he rented the property out, or lost his job, or if he significantly remodeled (home made indoor swimming pool anyone) or many other things. I know if I carried his note I would. However, this in my mind does not create an ethical obligation for him to notify them every time one of these things happens.
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