Beazer Homes USA

Beazer Homes USA
Public
Traded as NYSE: BZH
Industry Homebuilding
Headquarters Atlanta, Georgia
Products Homes
Website www.beazer.com

Beazer Homes USA is an American homebuilding company based in Atlanta, Georgia. The company builds and sells primarily single-family homes in twenty states of the continental United States. It also offers home mortgage services through its subsidiary, Beazer Mortgage Corporation. Beazer Homes USA was found guilty of mortgage fraud on a grand scale in the Subprime mortgage crisis and is credited with being a significant trigger of the Great Recession.

Formation of the business

The company was originally established when Beazer, a British house builder, made its first foray into the USA with the purchase of Cohn Communities, a small Atlanta-based housebuilder. After buying two more US-based house building companies, the US operation was renamed Beazer Homes USA.[1]

2007 investigations and litigation

In March 2007, Beazer received a grand jury subpoena from the U.S. Attorney's Office in the United States District Court for the Western District of North Carolina seeking documents related to its mortgage origination services. Media reports have indicated that the company is under federal investigation for alleged mortgage fraud, a charge the company denies. Beazer has said the U.S. Attorney's Office has "made no allegations of wrongdoing by Beazer Homes at this time and that the statements made by a Federal Bureau of Investigation spokesperson about the fact of an investigation and the scope of the investigation were unauthorized, and should not have been made".[2]

Beazer reported in a Securities and Exchange Commission (SEC) filing on May 3, 2007, that the SEC has launched an informal investigation of the company. The company said that the inquiry will determine whether any person or entity related to Beazer Homes has violated federal securities laws.[3]

On July 4, 2007, it was reported that a lawsuit has been filed by 10 homebuyers against Beazer Homes USA, Beazer Mortgage Corporation, and a Beazer sales agent, Roderick D. Williams, in Mecklenburg County Superior Court. The lawsuit alleges that fraudulent tactics were so pervasive in a Beazer Homes housing development in Charlotte that corporate management must have participated or condoned the approach, according to a lawsuit filed against the Atlanta-based company. "This is an abuse-of-trust case", said Charlotte lawyer Ken Davies, whose firm represents the plaintiffs, most of whom bought their first homes in Beazer's Oak Hill development. "Our clients all say, 'I should never have bought this house, but I was told I could afford it and I could qualify for a loan...' They had a right to rely on the professionals to guide them appropriately". The homebuyers are seeking compensation for homebuyers' losses and punitive damages from Beazer. An analysis by The Charlotte Observer shows that at least 14 of 140 homes in Oak Hill have fallen into foreclosure, a 10 percent foreclosure rate. Nationally, less than 3 percent of home purchases end in foreclosure. The newspaper's analysis also found that 10 of Beazer's subdivisions in Charlotte had rates of 20 percent or higher. The lawsuit said that the sales agent falsified documents to help buyers get loans for Beazer homes. Among the allegations are that assets and debts were misrepresented on loan applications and important information concealed. The lawsuit says one buyer lost her home in foreclosure and another filed for bankruptcy. Meanwhile, property values have declined because of the foreclosures, the lawsuit says. At least three other homeowner lawsuits—two in the Charlotte area—target Beazer's sales and mortgage practices.[4]

On July 23, 2007, Beazer Homes USA Inc. reported that it received a formal order of private investigation issued by the SEC on July 20, 2007. Beazer was placed under an informal investigation in May 2007.[5]

Federal settlement

On October 30, 2007, six home builders, including Beazer Homes USA, agreed to pay $1.4 million to settle federal allegations that they illegally established title insurance companies that took payments for a portion of the insurance risk. Under the settlement announced by the U.S. Department of Housing and Urban Development, Beazer Homes, TOUSA, Pulte Homes, KB Home, Meritage Homes, and Ryland Homes denied any wrongdoing, but said they settled the civil cases to avoid legal expenses. The companies agreed to six separate settlements. Beazer Homes and its captive title reinsurance company Security Title Insurance Co. agreed to pay a $261,000 settlement. HUD alleged that the builders were illegally using their own "captive" title insurance companies to receive payments for a portion of the insurance risk, when no such arrangement is necessary in the single-family home market.[6]

2009 investigations and litigation

On July 1, 2009, Beazer Homes USA, Inc reaches $50 million settlement of Mortgage and Accounting Fraud with United States. As described more fully in the bill of information, Beazer and its subsidiary, Beazer Mortgage Corporation, admit to engaging in several fraudulent mortgage origination practices, including:

References

  1. "Bzh Company Concerned With Construction Beazer Homes Mortgage Origination Insurance Services". New like this. July 2, 2013. Retrieved February 17, 2016.
  2. "Beazer Homes: $123m loss and 36% fewer closings". Gypsum Today. 26 July 2007. Retrieved 17 February 2016.
  3. Jonas, Ilaina (May 3, 2007). "SEC conducting informal inquiry into Beazer". Reuters.
  4. "Beazer lawsuit alleges fraud in N.C. sales", The Atlanta Journal-Constitution, July 4, 2007.
  5. "SEC Formalizes Beazer Investigation", Atlanta Business Journal, July 23, 2007
  6. "Beazer Homes, other builders agree to $1.4M HUD settlement", Atlanta Business Journal, October 30, 2007.
  7. "Beazer Homes USA reaches $50,000,000 settlement", FBI - Charlotte, July 1, 2009

External links

This article is issued from Wikipedia - version of the Wednesday, February 17, 2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.