Federal investigations into Beazer Homes USA Inc. center around mortgage fraud allegations at its mortgage unit. Among federal agencies investigating the company are HUD's Office of Inspector General, the Internal Revenue Service, the FBI and the U. S. Attorney's office.
The investigations are focused on loans secured by homes in at least one North Carolina subdivision developed by Atlanta-based Beazer Homes.
Beazer Homes, which operates in 21 states, originates loans through its subsidiary Beazer Mortgage Corp., which has 31 offices in 16 states.
A year ago, its Charlotte office, one of two North Carolina offices, voluntarily surrendered its right to make FHA loans but its 15 other offices, including the one in Raleigh, remained FHA-approved lenders.
The investigation of potential fraudulent lending practices involving FHA-insured and other mortgages, which reportedly have experienced high rates of foreclosures, was confirmed by a Washington, D.C., official with one of the agencies, who told MortgageDaily.com that he has been following the investigation but declined to provide further details.
FBI spokesman Ken Lucas of the bureau's Charlotte office was quoted as telling BusinessWeek magazine that the joint investigation is looking at "all types of [potential] fraud associated with Beazer -- corporate, mortgage, investments."
When contacted by MortgageDaily.com, Lucas declined, through a spokesperson, to say anything further.
Beazer Homes said, in a statement, that it would not comment on or verify any investigation but that it will "fully cooperate with any investigation by any government agency" and is already cooperating with a request for certain documents.
In its defense, it said it merely collected the necessary information from home purchasers and then submitted that information to lenders who then underwrote and approved the loans. Its internal investigations have not found any evidence to support allegations of the illegal or fraudulent activities that have been made against it.
Beazer has acknowledged using buydowns to help people qualify for loans, a practice that may be one issue in the federal investigation because the FHA allows buydowns only when it has been documented that homebuyers can still afford the higher payments that occur when those buydowns expire.
Beazer Homes also has been named as defendant in a class action lawsuit that charges the firm with illegally arranging mortgage loans that some borrowers could not afford, resulting in multiple foreclosures and declining property values, according to attorney Matthew R. Arnold, of Andresen & Associates, Charlotte, who filed the suit on March 23, after the federal investigation began.
The North Carolina Appraisal Board, which licenses appraisers, reportedly is considering investigating whether appraisals of homes in some Beazer Homes developments were inflated.
Last week, Beazer's CFO, James O'Leary, resigned to become president and CEO of Kaydon Corp.
Beazer's stock price continued to slide as news of the federal investigation spread -- falling $3.01 per share to $28.40 Wednesday afternoon. Shares had traded as high as $69.61 during the past year.