Beazer To Refund Millions To NC Borrowers
The Associated Press
05/19/09 - 11:01 AM EDT
MARTHA WAGGONER
RALEIGH, N.C. (AP) Beazer Mortgage Corp., which ceased operations more than a year ago, will refund $2.5 million to more than a thousand borrowers in North Carolina as part of a settlement over claims the Atlanta-based company violated state lending laws, state banking and company officials said Tuesday.
The banking commissioner's office said it investigated Beazer in 2007, finding "numerous and serious violations" of state lending laws.
"We believe that many homeowners were sold loans from Beazer Mortgage that violated North Carolina law," said Mark Pearce, deputy commissioner of banks. "These homeowners will receive a substantial refund of fees we believe were collected illegally."
The North Carolina Office of the Commissioner of the Banks said the average refund will be more than $1,500 and will be disbursed within the next 60 days. Eligible borrowers don't have to take action to receive the money.
Beazer Mortgage, a former subsidiary of homebuilder Beazer Homes USA Inc., exited the mortgage business in February 2008. The builder now has a lending partnership with Bank of America.
Beazer said in a news release that it agreed to the settlement without admitting to any violations, and declined to comment further.
As part of the North Carolina settlement, the banking commissioner's office agreed not to investigate Beazer further or take any more enforcement actions against the company.
However, there is still an open and similar investigation by the U.S. attorney in North Carolina's Western District. The company said previously that it received a subpoena seeking the production of documents focusing on the company's mortgage origination services.
"There can be no assurance that the company can conclude an agreement with the U.S. Attorney on financial or non-financial terms that are mutually acceptable," Beazer said in the news release Tuesday.
The North Carolina banking commissioner's office said it investigated Beazer in 2007, finding "numerous and serious violations" of state lending laws, especially of those involving discount points.
State law requires that discount points be paid for the purpose of reducing a borrower's interest rate. The settlement means Beazer will provide substantial refunds of those points, the banking commissoner's office said.
A borrower pays a discount point to get an interest rate lower than the prevailing market rate, thus getting a lower monthly payment. The banking commissioner's office said it did not believe Beazer's discount points worked this way.
Last September, Beazer reached a settlement with the Securities and Exchange Commission, ending the agency's investigation into the company's business practices without fines or penalties.
In July 2007, the SEC made formal an inquiry aimed at determining whether the company had violated any securities laws.
Beazer's shares were down 6 cents at $2.75 in late afternoon trading Tuesday.
