Did Homebuilders Getting Into The Mortgage Lending Business Help Fuel Subprime Problem?

BusinessWeek.com recently ran a story about how homebuilders who got into the mortgage lending business to finance their own sales has reprtedly fueled the subprime mortgage lending mess. The story states:

• "In addition to spitting out subdivisions, many of which now stand half-empty, builders jumped into the mortgage business to a degree they never had. Wall Street provided the same encouragement it offered other lenders. Even as the housing supply began to exceed demand last year, builders kept sales brisk by pushing adjustable-rate, interest-only, and other risky loans. In some cases they attracted clientele who couldn't afford conventional mortgages. In others, builders allegedly violated federal lending standards to get customers to sign on the dotted line."

Among those homebuilders getting a mention in the story is Beazer Homes USA Inc., which is currently the subject of a Federal investigation, as well as a number of lawsuits in connection with the lending practices of its mortgage financing arm. For more, see Bonfire Of The Builders (By rushing into the mortgage business big-time, homebuilders helped fuel the housing crisis).

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