I don't even understand the general premise here - why prevent someone from renting out a property they have bought on mortgage? What's the impact to the lender? Surely just that there's greater chance that mortgage payments are actually made? Or is this some kind of response to people buying properties they can't afford and can't rent out?

I thought the issue is that she marked the home as her primary residence thus getting a lower interest rate on a government backed home loan. Ie. she lied on the mortgage application.

That's the narrative being spun in the press and politics, but the facts are different it appears from this analysis.

Probably, nothing can be believed in the political sphere, nor it's retelling in the news now.