Atlanta-based homebuilder Beazer Homes, facing trouble on several fronts, has self-reported violations going back several years in its mortgage business. The release from the company can be found by clicking to their website. Here is a portion of the release –
The internal investigation found evidence that employees of the Company’s Beazer Mortgage Corporation subsidiary violated certain U.S. Department of Housing and Urban Development ("HUD") regulations, particularly in relation to Down Payment Assistance programs, in certain Federal Housing Administration ("FHA") insured loans originated by Beazer Mortgage Corporation dating back to at least 2000. As discussed below, due to several uncertainties regarding the Company’s ultimate liability from these matters, at this time it is not possible for the Company to determine the total financial statement impact related to the mortgage issues identified in the internal investigation.
The Company’s potential future liability relates, in part, to the impact of providing reimbursement of losses arising from mortgage defaults in circumstances in which the Company’s FHA-insured mortgage origination activities would have violated standard representations made to mortgage purchasers. In the event of fraud or certain misrepresentations at the time of the sale of such FHA-insured loans, the Company may be liable for losses suffered either by the mortgage purchaser, or HUD if any payment was made pursuant to an FHA loan guarantee. The factors influencing the extent of such potential future liability include, among other things, the number of FHA-insured loans originated by Beazer Mortgage Corporation, the percentage of such loans in which misrepresentations or fraud may have occurred, and the default rate, principal amount and losses associated with such loans.
More information from the Atlanta Journal –
Beazer Homes USA, the troubled Atlanta-based homebuilder, said Thursday that a five-month internal investigation found evidence that employees violated federal regulations governing its mortgage loan business "dating back to at least 2000."
The company also said it will have to restate financial earnings results for much of the past decade. Those restatements will likely boost net earnings cumulatively, but will cut profit for its fiscal 2006 year, Beazer said. …