FBI, Observer Investigate Homebuilder Beazer Homes USA

SmartMoney.com reports:

• The FBI and the U.S. Attorney's office in Charlotte, N.C., along with the Internal Revenue Service and the U.S. Department of Housing and Urban Development, launched an investigation of Beazer Homes last week, FBI agent Ken Lucas said Tuesday. Lucas, a spokesman for the FBI's Charlotte field office, said the inquiry involves "fraud in general," and more specifically is related to corporate, mortgage and investment issues.

For more, see Mortgage Fraud Probe Targets Beazer.

The Charlotte Observer has recently done a four part investigative report on North Carolina homebuilder Beazer Homes USA. The report, appearing in The Observer over a four day period earlier this month, points out a number of glaring points that give rise to questions about how Beazer conducted business.

For example, the report states that :

• "Beazer built about 2,900 homes in Mecklenburg [County, North Carolina] between 1997 and 2006. At least 388 have foreclosed. That is a rate above 13 percent, the highest among the county's 10 most prolific builders during that period ..."

• "The Beazer foreclosures are concentrated in 10 developments, each of which has a foreclosure rate of 20 percent or higher. Together they contain about 1,150 homes and at least 280 foreclosures."

• "The Federal Housing Administration, which insured most of the mortgage loans, failed to address the problems. The government has paid more than $5 million to cover defaulted loans in [one neighborhood]. It continues to insure new Beazer loans."

• "The FHA loans that Beazer Mortgage arranged often were aggressive. The company provided down payments for most of its borrowers, leaving them with little stake in the homes. It also arranged loans with monthly payments that started low but rose sharply after the first and second years, a feature known as a buydown."

Parts of the report, with such titles as:

• One builder, hundreds of foreclosures,
• Failed mortgages fly under the radar
• The Prices: Homes with Beazer loans cost more
• The Loans: Data wrong on some applications

only begin to give a reader a taste of what The Observer's revelations contained. To read more, including links to the entire four part report, see Sold a Nightmare (Concord subdivision proves lucrative for builder and costly for 1st-time owners).

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