Major homebuilder Beazer Homes has reached a settlement involving the company’s loan origination practices in which it will pay roughly $50 million in restitution to home buyers and the HUD.
The company was accused of fraudulently originating FHA loans by charging illegal fees, making loans to unqualified buyers, gifting down payments improperly and then increasing home prices to offset the expense, and conspiring to hide its high default rate from the FHA.
“We deeply regret these matters and have used what we have learned to strengthen our control and compliance culture and reinforce our absolute commitment to act according to the highest standards of ethical conduct throughout our organization, said Ian J. McCarthy, president and CEO of Beazer Homes, in a release.
“We are pleased that the governmental authorities recognized our cooperation and remedial measures.”
The SEC also filed a criminal complaint against Beazer’s former chief accounting officer Michael T. Rand for using improper accounting procedures to ensure the company met earnings expectations.
In February 2008, Beazer shut its mortgage origination business, dismissed the employees involved in the alleged fraud, and implemented changes in its internal controls over financial reporting.
The company now works with Bank of America Home Loans to provide mortgage financing.
So that’s what Beazernomics is…
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