Industry News

Feds investigate home builder’s lending practices

Newspaper uncovers high default rate among Beazer projects

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A series of stories in the Charlotte Observer has prompted a federal investigation into the mortgage lending practices of Atlanta-based Beazer Homes in North Carolina. In a series of stories beginning March 18, the Observer reported that at least 388 of the 2,900 homes Beazer built in Mecklenburg County, N.C., between 1997 and 2006 have foreclosed. Beazer is both a builder and mortgage broker, arranging loans for buyers of its homes. The Observer said that in some instances, Beazer brokered loans that buyers could not afford, and included the cost of financial incentives in the price of homes. Some of the company's actions violated federal lending rules, the Observer alleged, including four instances where loans were based on misstated information about applicants' income and debts. Many loans Beazer brokered in the Charlotte area were insured by the Federal Housing Administration, and the Observer found FHA-backed loans were associated with more foreclosures than any other kind of lo...