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 loan.
The Observer today reported that several federal agencies are conducting a joint investigation of potential fraud, including the builder’s role in arranging loans for home buyers. The agencies conducting the investigation are the Federal Bureau of Investigation, the Internal Revenue Service, and the Department of Housing and Urban Development.
Beazer officials said in a statement that they have been in contact with the U.S. Attorney’s office and “at this time, there have been no allegations of any wrongdoing.” Beazer said it has received a request for documents relating to its mortgage business and is “fully cooperating” with the request.
“We believe this request was fueled by the articles recently published by the Charlotte Observer,” the company said in a statement today. “Based on our internal investigations to date, we have found no evidence to support the allegations in these articles.”
In the article published today, Observer editor Rick Thames stood by the paper’s stories, saying reporters began tracking “an abnormally high rate of foreclosure” in the Charlotte area more than a year ago. The research led to an examination of subdivisions built by Beazer, Thames said.
