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Beazer Settles $50M HUD-Backed Mortgage Fraud Allegations

July 2, 2009

Atlanta-based Beazer Homes USA Inc. and Beazer Mortgage Corp. have agreed to pay the U.S. $5 million dollars plus contingent payments up to $48 million dollars to be shared with victims to resolve allegations of fraudulent federally-insured mortgages for low income families, reports DoJ.  The settlement resolves allegations that the companies:

(1) required purchasers to pay “interest discount points” at closing, but then kept the cash and failed to reduce interest rates;
(2) provided cash “gifts” to home purchasers through certain charities, so purchasers could come up with minimum required down payments, with assurances the “gifts” would not have to be repaid, and then increased home purchase prices to offset the amount of the gifts;
(3) obscured which of its branches made defaulting mortgage loans to avoid FHA detection of excessive default rates; and
(4) ignored “stated income” requirements in making loans to unqualified purchasers.

To report federally-insured mortgage fraud, contact Frohsin & Barger.

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