Beazer settles $50M mortgage fraud case
Resolves allegations of improper mortgage activities. Separately, SEC alleges former exec Michael Rand manipulated the homebuilder's results.
301 Moved Permanently
WASHINGTON (Reuters) -- Beazer Homes USA Inc. agreed to pay $5 million to the U.S. government and up to $48 million to private homeowners to settle allegations that it was involved in fraudulent mortgage activities, the Justice Department said Wednesday.
The settlement resolved allegations that Beazer and its mortgage unit, Beazer Mortgage Corp. (BZH), in making Federal Housing Administration insured loans were involved in fraudulent mortgage origination activities, the department said.
The Justice Department, which has focused on pursuing mortgage fraud cases during the economic downturn, said as a result of Beazer's alleged activities unqualified home buyers were "induced" to enter into FHA insured mortgages and interest rates for the loans were "improperly inflated."
The U.S. government agreed not to prosecute the company in connection with the case if the firm satisfies its obligations under the deferred prosecution agreement over the next 60 months.
In Atlanta, the company said in a statement that it has fully cooperated with the investigations by various government authorities and that it had reached a settlement.
"We deeply regret these matters and have used what we have learned to strengthen our control and compliance culture and reinforce our absolute commitment to act according to the highest standards of ethical conduct," said Ian McCarthy, president and chief executive officer.
Separately, the U.S. Securities and Exchange Commission Wednesday accused Michael Rand, a former chief accounting officer at Beazer, of running a fraudulent scheme to manipulate the builder's results.