For advice or the meaning of legal documents for your specific situation contact your real estate attorney.
Comments on your question:
Lenders do not issue the security instrument. They or their attorneys prepare the instruments for the borrower’s agreement and signature.
Regarding the borrower falsifying information the security instrument you reference says:
“8. Borrowers Loan Application. Borrower shall be in default if, during the Loan application process, Borrower or any persons or entities acting at the direction of Borrower or with Borrowers knowledge or consent gave materially false, misleading, or inaccurate information or statements to Lender (or failed to provide Lender with material information) in connection with the Loan. Material representations include, but are not limited to, representations concerning Borrowers occupancy of the Property as Borrowers principal residence.”
The 1-4 family rider is appropriate for property producing income, but not necessary for property to be occupied by the borrower. Perhaps it was used in error. Some lenders use the rider “just in case” the borrower moves out of the house sometime after closing, because the rents are then assigned to the lender for the purpose of application to the loan balance. But for owner-occupied home loans, this mortgage rider isn’t really needed.