Georgia Mortgage Fraud Subject of Probe Into Atlanta Home Builder

Beazer Homes, which has recently suffered hefty losses amid a downturn in the housing market, is now facing a federal investigation of home mortgage fraud and other allegations.

The FBI and the U.S. attorney’s office in Charlotte, N.C., along with the IRS and the U.S. Department of Housing and Urban Development, launched an investigation of Beazer Homes last week, FBI agent Ken Lucas said.

Lucas, a spokesman for the FBI’s Charlotte field office, said the inquiry involves “fraud in general,” and more specifically is related to corporate, Georgia mortgage and investment issues.

Asked whether investigators would seek to question corporate officers and subpoena the home builder’s records, Lucas said he wasn’t sure.

“We just started this,” Lucas said.

Lucas declined to release more details about the ongoing home loan investigation. He also would not say what prompted the inquiry in the first place, or what the next step(s) would be.

In a statement regarding the mortgage fraud investigation, Beazer said it “cannot comment on or verify any investigation. However, we will fully cooperate with any government agency.”

“Beazer Homes has a long-established commitment to managing and conducting business in an honest, ethical and lawful manner,” the statement said.

Last week, Beazer Homes said that its CFO, James O’Leary, was stepping down after four years with the home builder to become president and CEO of Kaydon Corp.

Beazer has suffered from the housing downturn.

Weak demand for new construction, slow new home sales, properties at very steep discounts and the need for inventory writedowns have taken a toll on the company’s results.

This is the latest major company to face allegations of mortgage loan impropriety stemming from the housing market cooling. We’ll be monitoring this situation to bring you the latest.

SOURCE: SmartMoney.com