Countrywide Financial Corp. will be the “preferred mortgage provider” for customers of Beazer Homes USA Inc. as the builder closes its troubled mortgage origination unit and winds down home-building operations in five markets.
Originations through Beazer Mortgage Corp. are discontinued “effective immediately,” Beazer said today in announcing an agreement in which Countrywide loan counselors will market loans to buyers at all Beazer Homes’ projects.
Beazer announced on March 29 that it had been subpoenaed by the U.S. Attorney’s office in the Western District of North Carolina, which sought documents related to its mortgage origination services. The subpoena followed a series of stories in the Charlotte Observer documenting cases in which the company appeared to have broken rules governing down-payment assistance, placing buyers in homes they couldn’t afford, and including the cost of financial incentives in the price of the homes.
In October, Beazer officials said they would restate earnings going back to 2004, after finding evidence that employees of Beazer Mortgage Corp. violated Department of Housing and Urban Development regulations pertaining to down-payment-assistance programs. The possible violations were made by employees originating loans insured by the Federal Housing Administration dating back to 2000, the company said. Company officials said they hoped to settle with regulators for $8 million to $15 million (see Inman News story).
In a separate matter, Beazer Homes last year was among 11 home builders and one lender that agreed to pay nearly $5 million to settle allegations that they violated the Real Estate Settlement Procedures Act (RESPA) by creating subsidiary companies to “reinsure” home buyers’ title insurance policies.
Beazer Homes maintained that its captive title reinsurance subsidiary, Security Title, was not subject to RESPA because it did not provide settlement services, but paid $261,000 to settle the charges (see story).
Beazer Homes, its subsidiaries, and current and former officers and directors have also been named as defendants in several civil lawsuits that seek class-action status.
In addition to the new marketing agreement with Countrywide, Beazer Homes today said it will close its home-building operations and sell its land holdings in Charlotte, N.C.; Columbia, S.C.; Lexington, Ky.; and two markets in Ohio, Columbus and Cincinnati-Dayton. Beazer said it will complete all homes under construction in those markets and provide ongoing warranty service to homeowners.
The Atlanta-based home builder announced in November that it had cut 650 positions, or about a quarter of the company’s workforce (see story).
Because it is restating earnings dating back to 2004, Beazer has not reported audited financial results since April 2007. Company officials said today they hope to complete the restatements by May 15, and provided preliminary financial and operating numbers for the quarter ending Dec. 31.
Home closings for the quarter were down 24 percent from a year ago, to 2,010, and new home orders were down 29 percent to 1,260. The cancellation rate — 46 percent — was down from 68 percent for the quarter ending Sept. 30.
At more than $325 million, Beazer’s cash balance at the end of 2007 was improved from $155 million a year ago, but down from $460 million the previous quarter.
Beazer has reduced its land position 31 percent from a year ago, to 58,000 lots as of Dec. 31. The inventory of unsold finished homes was down 49 percent from a year ago, and unsold homes under construction were down 37 percent.
Beazer has operations in 21 states — Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia.