I agree with Code 3. The Commentary to §1003.4(a)(6) #4 states
"…a property is an investment property if the borrower does not, or the applicant will not, occupy the property."
This is really a catch all and should be labeled as "Other", not "Investment Property." For instance, if I pledge my house as collateral for someone to get a loan (a 3rd party pledge), but I am not a borrower, then the LAR should say this is a Code 3 for occupancy type. My house is not the borrower's primary residence or their secondary residence.