Lawsuits filed against Beazer Homes

Charlotte, NCA lawsuit has been filed against Beazer Homes Corp. and Beazer Mortgage Corp. The lawsuit, which is seeking class action status, claims that Beazer violated North Carolina General Statutes Chapter 75, which is designed to protect consumers by setting out unfair and deceptive trade practices.

Plaintiffs claim that Beazer Homes and Beazer Mortgage conspired to illegally finance homebuyers who were not qualified for mortgages so that they could buy newly built homes.

The lawsuit claims that Beazer changed information on forms that were filled out by prospective buyers so that the buyer could qualify to purchase a home in a Beazer subdivision. Beazer is also alleged to have advised or encouraged buyers to falsify information given on their application. The lawsuit is seeking damages of less than $74,999 for each class member.

A lawsuit has also been filed on behalf of people who purchased common stock in Beazer from July 27, 2006 and March 27, 2007. The suit claims that the defendants "issued false and misleading statements regarding the Company's business and prospects." Furthermore, the lawsuit alleges, Beazer did not have the proper internal controls over its lending practices, which led to the high number of foreclosures, and did not inform the investing public that many buyers would not be able to pay their loans after the first two years. According to lawyers, the company's stock fell nine percent in one day and 40 percent from its class period after news of an investigation into the company's practices was made public.

BusinessWeek has reported that authorities are investigating the company's lending practices. The Federal Bureau of Investigation, the Internal Revenue Service, the Inspector General of Housing and Urban Development, and the Justice Department have opened a joint investigation into Beazer's practices. The investigations were opened after a report in The Charlotte Observer that claimed Beazer had foreclosure rates of around 20 percent. The national foreclosure rate is around three percent.

Beazer Homes has had other lawsuits in the past. In 2002, the company faced a lawsuit from homeowners in the Village at Craig Ranch, claiming that expansive soils caused damage to their homes. The plaintiffs sought almost $25 million in damages, alleging that Beazer violated building code requirements. According to the plaintiffs' lawyer, Beazer was also advised not to plant anything within 10 feet of the foundations of the homes without subsurface drainage, but the company ignored those warnings.