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Wasn't there a whole thing about the lawmakers not being allowed to sleep in their office in D.C. anymore which made it so less wealthy politicians would struggle to be able to afford to rent a place in D.C. until they started having money actually roll in. It would make sense that the politicians either rent or own a place near D.C. if they have to work there and can't stay in their offices. If the property was owned in say Florida, Tennessee, Texas, Alaska, or some other state that doesn't have income taxes and was claiming that as his primary residence I could understand why it could be cause for alarm, but nope. The place he lives and represents... And the place he works from to represent them.
The mortgage fraud accusation itself is a paperwork violation. There's nothing preventing someone from owning multiple houses, but lenders and insurers need to know which residence is the one the person spends the most time at. However, the easy way out of it is to simply be transparent with all your banks. That means you might pay a little more on loans and insurance on the second house, but so what? If you can buy a second house at all, you can afford it.
I think Trump zeroed on on this (among all the dirt Kash Patel is digging up) because it mirrors his own NY State charges. His organization was "convicted" by the state of lying on its loan applications to banks by overvaluing its properties. He can believe that Schiff lied on these loan applications because it's something he would do. Accusing Schiff of this, however falsely the accusation is, also justifies in his mind that he was "unfairly" persecuted for what he did because "everyone does it!"
So the assumption would be that he listed both properties as a primary address to get a lower interest rate on the loan. (As clearly he couldn't lie about the value, being that the bank giving him the loan would own the property essentially). I mean it should be pretty easy to clear up if he didn't do it. And since Trump made the comments publicly, I can't imagine it to be hard for a court to consider it defamation. If he did do it, then welp he's dumb for doing so.
It's also possible that he listed his California residence as primary when he bought that, since that was the truth. Then, when he bought his DC house, he realized that it would be more beneficial to him to "change" his primary residence, so did so. He may or may not have been required to go back to his CA house lender and tell them about it, or his wife may have legitimately still listed the CA house as her primary residence since she may legitimately stay there more often. Schiff may have done everything properly, but Kash Patel can cherry-pick things that were done properly to make it appear improper to people who arent paying attention.