Beazer Homes faces FBI, HUD, IRS investigation

NEW -> Contingent Buyer Assistance Program
Illrvine....posted this earlier on the site and I wonder what other companies could be involved? Is it a safe assumption that the majority of homebuilders are also soliciting their own mortgages as well?
 
Mimo, I'm sorry...but I couldn't resist. The headline is too juicy to be buried with the other stuff. Is this another New Century about to be exposed? Bigger question is, is there a correlation between those homebuilders with high percentage of sales to flippers somehow engaged in this practice that is now being questioned by IRS, FBI, and HUD? Are they actively fueling the frauds and not as passive observers so long as they sell houses?
 
<p>The Charlotte Observer is the paper that broke this story and have dedicated a whole webpage to the problem.</p>

<p><a href="http://www.charlotte.com/523/">http://www.charlotte.com/523/</a></p>

<p>At first I just thought it was just a very well put together blog but I guess there are some reporters who do work these days.</p>
 
graphrix - the Charlotte article troubles me in that many of these loans involve FHA which now means that because it involves government-insured loans, the taxpayers, us, will end up footing the bill. This on top of Sen. Dodd's proposal to bail the subprime borrowers out of foreclosures?
 
"Standard & Poor's on Wednesday changed its outlook on Beazer Homes USA, Inc. to negative from stable, citing expectations of sharply lower earnings at the home builder.





<p> "The outlook revision reflects our expectation for sharply lower earnings in 2007, which raises the potential that coverage measures could fall below covenanted levels governing the company's unsecured line of credit," S&P said in a statement.</p>

<p> "Should rising foreclosures and tightening credit standards further pressure sales of Beazer's more narrowly targeted product and materially erode coverage measures, we will lower the rating," S&P said.</p>

<p> The change in outlook does not reflect a federal probe into Beazer Homes' mortgage lending practice, though "it acknowledges potential distractions that may arise related to this matter," S&P added."</p>
 
<p>IIIrvine - I agree that the taxpayers shouldn't have to foot the bill. I had to check it out and unlike OC and CA you can check the property history online. What I found is many of these properties foreclosed in 2004 and 2005. If you click on the interactive map on the Observer article you can zoom in on the property and the addresses will be listed on the right. You can click on the address and it will give you the title history. It's pretty cool and I wish we had that here without having to go through a title company.</p>

<p>As for FHA loans from my limited understanding of them the taxpayer shouldn't be footing the bill for foreclosures. We foot the bill just to have them since we subsidize the lower rate in the first place. The borrower pays mortgage insurance and that helps with a percentage that would be lost if foreclosed. Typically about 30% of the value so it should be ok unless the prices were extremely inflated. Plus I would imagine they have more money coming in from the insurance rather than going out. Although that could change if foreclosures were to increase. I am not 100% confident in the info I have but I think I am on the right track. </p>
 
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