Two class action lawsuits have been filed against Atlanta-based Beazer Homes USA Inc. by both North Carolina residents and Beazer stock purchasers. The giant home building company has been accused of (1) not disclosing facts about its lending practices, and (2) that it used unfair trade practices to let low income purchasers qualify for loans they allegedly could not afford. These allegations are in violation of the North Carolina General Statutes Chapter 75, a consumer protection statute which proscribes unfair and deceptive trade practices.
Beazer and its mortgage company recently received a subpoena from the U.S. Attorney's Office in the Western District of North Carolina requesting documents related to its mortgage origination services. Beazer apparently built newly-constructed homes in numerous "low income" subdivisions in North Carolina and sold them to unqualified purchasers. One of the suits alleges that Beazer Homes Corp. and Beazer Mortgage Corporation conspired to illegally finance unqualified purchasers to buy newly-constructed homes, thus making widespread foreclosure and abnormal property devaluation inevitable.
On March 20, 2007, the Charlotte Observer reported that Beazer had a high rate of foreclosures in the Charlotte, N.C., area. More than 13 percent of Beazer homes in that area have been foreclosed on â€" at least 388 properties â€" while nationally, fewer than 3 percent of buyers lose homes to foreclosure. As well, more than a year ago, the same newspaper reported that Beazer loans insured by the Federal Housing Administration were failing in large numbers.
A Department of Housing and Urban Development report found in two cases that Beazer failed to document if borrowers could afford mortgage loans and charged at least five borrowers several times the maximum loan fees. Both of these instances are in violation of Federal Housing Administration (FHA) rules.
Beazer Homes is one of the country's 10 largest single-family homebuilders that also provide mortgage origination to its homebuyers.
Beazer Homes Articles
Beazer Accused of Falsifying Loan Applications and Customer Satisfaction SurveysBeazer Homes Corp. and Beazer Mortgage Corp. face a lawsuit alleging the company violated the North Carolina General Statutes Chapter 75, which is designed to protect consumers by banning unfair business practices. The lawsuit, which seeks class action status, claims that Beazer illegally financed unqualified purchasers to buy newly built homes. It seeks damages for each class member of up to $74,998.
Lawsuits Filed Against Beazer Homes
A lawsuit has been filed against Beazer Homes Corp. and Beazer Mortgage Corp. The lawsuit, which is seeking class action status, claims that Beazer violated North Carolina General Statutes Chapter 75, which is designed to protect consumers by setting out unfair and deceptive trade practices.
Beazer Home Foreclosures in the News
JUN-10-07: Barrington has 107 starter homes built by Beazer but over 38 percent resulted in foreclosure. The national foreclosure average is less than three percent. [OBSERVER: BEAZER HOMES]MAY-15-07: The government is considering closing a loophole that allows home sellers such as Beazer to cover the cost of the down payment for homebuyers. Currently, many home sellers pay the down payment but they then raise the price of the house to cover the cost. [OBSERVER: BEAZER]
MAY-03-07: The SEC has begun an informal investigation of Beazer Homes in order to determine whether any person or organization related to the company has violated federal securities laws. [BUSINESS: BEAZER HOMES]
APR-30-2007: Some homeowners are claiming that Beazer Homes USA offered them money in exchange for high marks in a survey. The high marks may have resulted in bonuses for company executives. [WSOC: BEAZER HOMES]
APR-29-07: A newspaper investigation shows that some Beazer survey participants were paid for favorable responses to customer satisfaction surveys. Beazer filings show that 85.5 percent of customers surveyed said they would either definitely or most likely "recommend to a friend." [OBSERVER: BEAZER HOMES]
APR-27-07: The Beazer Homes board of directors' audit committee has launched an independent review into Beazer's lending practices. The company also faces a federal investigation as well as buyer and shareholder lawsuits. [JOURNAL-CONSTITUTION: BEAZER HOMES]
APR-26-07: Beazer Homes has reported a second-quarter loss and has also disclosed that it is the defendant in a number of lawsuits. [MARKET WATCH: BEAZER HOMES]
APR-24-07: Beazer Homes USA has named a new CFO after the former CFO resigned. Meanwhile, Beazer still faces a class action lawsuit from investors claiming Beazer issued false and misleading statements and did not disclose important information. The suit also alleges improper lending practices. [BUSINESS WEEKLY: BEAZER HOMES]
APR-15-07: Beazer Homes faces a federal investigation and a lawsuit filed by homeowners. The homeowners claim that Beazer's mortgage division used unfair practices in approving mortgages. Last year, Beazer's revenue was $5.5 billion and its net income was $388.8 million. [ATLANTA JOURNAL-CONSTITUTION: BEAZER HOME FORECLOSURES]
APR-11-07: Beazer reportedly has had a higher than normal rate of foreclosures. Of 2,900 Beazer homes built between 1997 and 2006, more than 13 percent have been foreclosed on, while the national number of homes foreclosed on is fewer than 3 percent. [EXAMINER: BEAZER HOME FORECLOSURES]
