Inquiry into Beazer nears 2-year mark

Federal agencies look into how the homebuilder arranged loans for some borrowers who couldn't afford them

This summer, after years of financial struggles and missed mortgage payments and subsequent refinancing, Lea and Mark Tingley finally felt a few paces ahead of foreclosure's pursuit. Then the dog got sick.

It was their daughter's dog, a Maltese named Gabanna, and the ensuing bill from the veterinarian about equaled their $870 mortgage payment.

"What were we going to do?" Lea Tingley said last week. "It's always something. We've been trying to catch up again ever since."

The Tingleys' story was featured in a March 2007 Charlotte Observer investigation into their Concord neighborhood, Southern Chase, and its developer, Beazer Homes USA. In its report, the Observer found that Beazer might have violated federal lending laws, leading to dozens of foreclosures in Southern Chase -- and hundreds in Mecklenburg County.

The Tingleys alleged that Beazer changed information on their mortgage application and that a Beazer representative told them to omit a monthly car lease payment on that application to better their chances for approval.

Now, a multiagency investigation of Beazer Homes is approaching two years without resolution, prompting the Tingleys -- and at least two lawmakers -- to wonder what's taking so long.

Pushing for an update

U.S. Rep. Mel Watt of Charlotte, a member of the House Financial Services Committee, said he plans to contact one of the investigating agencies, the Department of Housing and Urban Development, for a progress report.

"We can put more pressure on them to complete their investigation," Watt said.

The 2007 Observer series found Beazer's aggressive sales tactics, which included arranging loans some home buyers couldn't afford, had left at least 10 Beazer neighborhoods in Mecklenburg County with foreclosure rates of 20 percent or higher.

Within days of the Observer series, FBI spokesman Ken Lucas said the agency's Charlotte office had launched a joint investigation with HUD and the Internal Revenue Service into how Beazer arranged mortgage loans for those buyers. The Tingleys filed a lawsuit alleging that Beazer's actions had caused property values to decline in Southern Chase.

Beazer has since admitted that employees violated federal lending rules, including misconduct related to down-payment assistance and payment of real estate bonuses.

Another lawmaker, U.S. Rep. Sue Myrick of Charlotte, is troubled by the length of the investigation, spokesperson Taylor Stanford said last week. Myrick, who contacted HUD at the onset of the investigation, is unsure whether she will do so again. In a recent conference call with investors and reporters, Beazer President and CEO Ian McCarthy said the company continues to cooperate with federal and state investigations. He declined to comment further.

Spokesmen from HUD, the IRS and the U.S. Attorney's office in Charlotte either declined to comment or didn't return messages.

"It would make me feel better about the status of things if those things moved faster," Watt said.

As it would the Tingleys, who earlier this year had their lawsuit against Beazer dismissed by a federal judge. In his ruling, U.S. District Judge Martin Reidinger said that foreclosures and declining property values in the Tingleys' neighborhood couldn't directly be connected to Beazer. Other factors, such as job losses and a weaker economy, could have contributed to the loss in Southern Chase's property values.

The Tingleys, who purchased their house in 2001, say the economy was fine when their neighborhood began its decline. They may sue again if the investigations lead to Beazer's being found guilty of fraud.