“I’ve heard that some banks prefer to sell to owner-occupants instead of investors. Is that true? And it sounds like discrimination. Is it legal?”
You’re correct. Some banks do prefer to sell to owner-occupants.
For most banks, it’s strictly practical: all other things being equal (down payment, etc.), an owner-occupant has an easier time getting a loan. So that makes the sale more likely to close.
In addition, most owner-occupant buyers more emotionally involved in the home they’re buying than an investor is. That means they’re more likely to do what it takes to follow through with the sale. That’s opposed to an investor who’s usually not emotionally involved.
Fannie Mae has a policy where they want to promote homeownership, so they do give some preferential treatment to owner-occupant buyers.
As to discrimination, here’s my not-attorney answer…
Investors are not a “protected class”, so they can’t claim discrimination.