HUD fines homebuilder $50 Million
The U.S. District Court for the Western District of North Carolina charged Baezer Homes with:
- keeping discount points that should have been used to provide some homebuyers with a reduced interest rate.
- telling homeowners they were receiving a "gift" from a charity to cover their down payment when, in fact, the purchase price of the home they purchased was increased to offset the supposed "gift."
- for fraudulently circumventing HUD's "Neighborhood Watch" and "Credit Watch" programs,
- instituting a strategy of "willful blindness" with regard to some stated-income loans Baezer is a North Caroline company employing 15,000 people. The deferred prosecution agreement requires Beazer to immediately pay $10 million toward restitution, including $2.5 million already paid to the North Carolina Commissioner of Banks in May.
Analysts who follow the company say it may declare bankruptcy and stop paying into the fund, and that banks and other secured creditors would be paid before homeowners in a liquidation of the company's assets, the Charlotte Observer reported. Even if Beazer remains in business, the restitution fund may not be big enough to repay victims. Although the agreement requires Beazer to pay 4 percent of its adjusted earnings into the fund each year, the company reported a $114.9 million second-quarter loss and a $952 million annual loss in 2008, the Observer reported.
This article was e-mailed to me so a reference is unknown. I thought this interesting to see how a company was doing so well and fell so hard..