The Power of Print

The Charlotte Observer began a series of articles earlier in the month of March that questioned Beazer Homes (NYSE: BZH) and their lending practices. It seemed like there was an unusually high amount of foreclosures going on in the Beazer Homes.

Beazer not only built homes, but also financed them. Just like when you buy a car and the dealership is happy to front you the money. Big homebuilders saw a wonderful way to make money. The big money wasn’t in the actual building, but in the brokering of loans. Matching lender to buyer.

And the loans were insured by the FHA. The government. You and I.

But strangely, foreclosures started to occur at an alarming rate. One town in North Carolina, Mecklenburg had 35 “starter home” developments. The foreclosure rate was over 20%. The government does not track failure by neighborhoods. So, they asked The Charlotte Observer for help getting information.

Since 2002, Federal prosecutors have convicted more than 50 people in loan scams. Among those were builders, mortgage brokers, lawyers and appraisers.

Some people say you can’t feel sorry for some poor slob that gets suckered by a sign that says you can buy a home for only one dollar as a down payment. But we all dream of owning our own home. It’s the American Way.

The American Way is also a class action lawsuit filed against Beazer Homes.

The Justice Department has also given Beazer a grand jury subpoena for documents related to the mortgage business. The FBI is conducting a fraud investigation.

Had The Charlotte Observer not worked so hard to bring this story to light, Beazer may have been able to get away with these awful business practices.