Beazer Pays $2.5 Million in Mortgage Settlement
Beazer Mortgage Corporation (BZH), a subsidiary of Beazer Homes USA, will delve out a total of $2.5m to more than 1,000 N.C. borrowers due to alleged origination violations in 2007. The Atlanta-based homebuilder entered into a settlement agreement with the North Carolina Office of the Commissioner of Banks (NCCOB) today, but without admitting to the alleged violations, according to the company's statement. NCCOB claims Beazer Homes and Beazer Mortgage, which the homebuilder closed in February 2008, wrongly steered borrowers into their own mortgage operations, effectively earning kickbacks -- an allegation long brought against builders. "We believe that many homebuyers were sold loans from Beazer Mortgage that violated North Carolina law," Mark Pearce, N.C. deputy commissioner of banks, told the Charlotte Observer. Beazer allegedly failed to comply with North Carolina’s requirement that discount points be bona fide and paid for the purpose of reducing a borrower’s interest rate. Through this settlement, however, the homebuilder must provide refunds of these discount points to victimized homeowners. The company, once a major builder in the Charlotte area, left the market last year at the time it ceased mortgage operations, turning over its lending license to the state. Beazer said this month it expects to spend more than $80m to settle a lawsuit and a federal criminal investigation, according to the Observer. The firm said today the $2.5m in restitution is included in the approximately $13m it set aside at first quarter's end for estimated payments related to governmental investigations. As part of the settlement, the banking commission said it agreed to take no further investigative or enforcement action against Beazer. Write to Kelly Curran.