Uh Oh Beazers Homes is in trouble...... (Charlotte, Concord: real estate, foreclosures)

[JustChar]

with a capital T.

This was in yesterday's USA Today. It states:

"In one of Beazer's subdivisions in Concord, North Carolina, nearly one in five homes has fallen into forclosure according to an analysis by The Charlotte Observer

and

Beazer's being investigated by the Securties and Exchange Commission and the US Attorney's office in North Carolina on allegations that it broke rules governing down payment assistance, sold homes to low-income buyers who couldn't afford them, falsified documents and charged higher fees than the regulations allow.

Here is the article in case you are interested:

Beazer Homes faces up to $15M fine for loan violations - USATODAY.com

And no I am not trying to get into trouble with anyone with gloom and doom, just passing on information that I found.

Char

[raccemup]

well, if you play with fire, you should get burned. If they really did commit fraud then they deserve to pay for it. I'm just curious to know what exactly they did with the FHA down payment assistance that was illegal. Maybe that's because I have a Beazer home with an FHA loan and got down payment assistance? lol Actually, we didn't pay anything extra and got a fixed 6% 30 yr FHA loan. They gave us 3% for a down payment and payed all our closing costs. It seemed pretty straight forward to me. Maybe this affects their lower income/lower credit score buyers more? On the bright side, they built us a decent starter house that was affordable. Between this and the slump in most markets, I wonder if they will pull through.

[saturnfan]

The buyer is supposed to come up with their down payment themselves.

Builder supplying it distorts creditworthiness.

[raccemup]

Originally Posted by saturnfan

Builder supplying it distorts creditworthiness.

How so?

[ChipL]

Originally Posted by saturnfan

The buyer is supposed to come up with their down payment themselves.

Builder supplying it distorts creditworthiness.

Actually, it has been perfectly legal for the seller to provide the down payment. With FHA, the 3% down payment can come in the form of a gift from a friend, family member, non-profit, etc. Over a dozen years ago, IRS-approved non-profits began springing up for the sole purpose of providing FHA down payment assistance. HUD has recently stopped this, but Congress is considering bringing it back

[saturnfan]

If buyer can get in with no money up front, they have less incentive to avoid foreclosure if things get tight.

Sort of like investors.

[VickiR]

What I see as the problem with lenders and this huge amount of foreclosures is that lenders were issuing loans to buyers that didn't really qualify.

If your credit scores were a bit low, in years past, you had to build up your credit score to be able to get a loan.

Lately, lenders were too lenient and now its come back to hurt everyone.

Its really a shame because those buyers with the lower credit scores were given this chance to buy and now due to their inability to repay these loans, its really backfired. Maybe along with giving low scoring buyers a loan, there should have been some type of financial advice.

Vicki

[CaliBoy]

Originally Posted by JustChar

...allegations that it broke rules governing down payment assistance, sold homes to low-income buyers who couldn't afford them, falsified documents and charged higher fees than the regulations allow.

Well, if they, in fact, did this, then time will tell what punitive judgements will be assessed. However, I'm not one to NOT take responsibility as a homeowner/investor. Regarding the one allegation of "falsified documents"... if documents were indeed falsified and the buyer knew about it, I certainly hope whoever is investigating this will charge the buyer as well. Such buyers must take responsibility for any such actions, if they were active about it or knew about it, since part of the rising cost of housing came as a result of the housing frenzy the last seven years which only made housing prices climb forcing others who were more financially responsible but could not afford home ownership out of the market.

Of course, any loan entity knowingly falsifying information must atone as well. Hopefully, in the next decade (not this one) when housing improves, that lessons will be learned and not repeated. Again.

Originally Posted by VickiR

Its really a shame because those buyers with the lower credit scores were given this chance to buy and now due to their inability to repay these loans, its really backfired. Maybe along with giving low scoring buyers a loan, there should have been some type of financial advice.

I agree that financial advice would have helped.

On the other hand, such buyers should have taken more time to educate their selves and considered their financial position more seriously. We did. We waited because we knew, in Los Angeles, that we could not afford to buy another home at our current or short run income levels. Why did we know this. Because we are responsible buyers who take thought into our well-being before we made any financial decisions that would impact the rest of our lives. We do this for any financial decision we make. And the answers are out there. Waiting for someone to provide them for us is reckless. Blaming another for our own financial crisis only embraces such victim like attitude.

Yes, financial institutions certainly have blame. But I resist blaming them one hundred percent. Buying real estate and creating the lender/buyer relationship is a two way street.

Just how I feel about it. We were responsible when others were not. And the thought that a buyer bailout will occur only sickens me and belittles the responsibility that other buyers took in their own finances when rejecting a loan offering that was not in their best interest.

[VickiR]

Last year, I had a client that was referred to me. When I took her to one of my lenders, he told her that she didn't have the BEST credit but since she did have a full time job that she had worked at for the last couple of years, he could help her.

He began by pulling her credit and found that she had a couple of "collections". He explained to her that they had to be paid off. One was not her's so he explained how to get it taken off. It took her a couple of months to do this.

After that, she and I went out to look at houses. We made an offer, had an accepted contract.

Unfortunately, it was at this time that all these lender issues were coming up.

By the time we got her under contract and her information was sent to the lender, the loans had tightened up and she could no longer qualify.

Would she have gone into forclosure or would she have really buckled down to make her payments on time in order to stay in the house. In my opinion, she wanted to buy a house so badly that she would have never let it go, even if it meant getting a part time job on top of her full time job.

She is still working on getting her credit repaired so that her score will rise and very soon, she will be able to buy a house.

I guess it takes only a few people to ruin it for everyone.

Vicki

[raccemup]

Originally Posted by saturnfan

If buyer can get in with no money up front, they have less incentive to avoid foreclosure if things get tight.

Sort of like investors.

Well I actually agree with you that may be true in a lot of cases. In other instances, when the buyer has good credit and is just short of cash (as most first time buyers are these days) it's a good way to afford a first home to get that incentive. So I think the buyers with good credit who buy with no $ down or down payment assistance should not be grouped in with subprime buyers with bad credit who are more likely to default. To me getting down payment assistance does not automatically equal a subprime buyer. IMO, they are 2 totally different groups of people.