Beazer Homes to Pay $50M to Victimized Home Buyers

I’ve warned homebuyers before, “Don’t get taken to to the cleaners by home builders and their lenders”. And here’s why: In order to avoid prosecution on criminal fraud conspiracy charges, Beazer Homes agrees to pay $50 million in restitution to homebuyers who were allegedly victimized by the builder’s mortgage company.

Beazer and its subsidiary, Beazer Mortgage Corp., admitted to engaging in several fraudulent mortgage origination practices, prosecutors said, including keeping discount points that should have been used to provide some homebuyers with a reduced interest rate.

Other homebuyers were told 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.”

Beazer also accepted responsibility for fraudulently circumventing HUD’s “Neighborhood Watch” and “Credit Watch” programs, and of instituting a strategy of “willful blindness” with regard to some stated-income loans, prosecutors said.

Beazer Homes said Wednesday that it also reached a settlement agreement with the Department of Housing and Urban Development and the civil division of the Department of Justice. The company also said several of its subsidiaries have entered into a settlement agreement with the North Carolina Real Estate Commission.

Despite the $50 million agreement, neither Beazer nor homebuyers may be out of the woods. Prosecutors are also accusing Beazer Homes of mortgage and accounting fraud. And sources say that Beazer may declare bankruptcy, which would put homebuyers at the bottom of the list for getting money once the builder’s assets are liquidated.

And if you think that Beazer was the only one doing this and you’re in the clear because you bought from different home builder, you may be in for a rude awakening. There have been several state and federal lawsuits over the past few years involving many other home builders, small and large and I’m willing to bet more will follow.

The more of the story?

If you don’t know exactly what you’re doing nor what pitfalls and shady practices to look out for, you can, and as in this case, will get taken to the cleaners. Hire a Buyer’s Agent who is familiar with new home builders (aka has done numerous new home builder transactions) and take them with you whenever you visit a new home builder’s sales center.

A Buyer’s Agent who knows the ins and outs of new home builders will help you avoid getting ripped off and keep you out of trouble. They will be able to tell you if the builder is telling the truth or feeding you lies or if their “special deal” is really a deal or just fluff (as was the case with Beazer). Your Buyer’s Agent will also be able to guide you through the builders gazillion page contract and addenda, mortgage/financing process, builder’s Design Center process, pre-drywall inspection, final inspection, settlement, etc.

What will your Buyer’s Agent cost you? Not a penny more than what you would pay if you did not have an agent – the builder has already built the commission into the sales price. And no – the builder will not refund or credit you that amount of commission if you don’t have an agent.

Additional sources: Inman News