Beazer facing new suit

A lawsuit filed Tuesday by 10 homebuyers in northern Charlotte's Oak Hill development says a Beazer sales agent, Roderick D. Williams, falsified documents to help buyers get loans for Beazer homes.

Williams and Beazer Mortgage, which arranged five of the loans, are also named as defendants.

They misrepresented assets and debts on loan applications, the suit says, and concealed important information from buyers. They also concealed inflated sales prices of homes to cover fees and expenses, according to the suit.

The tactics were so pervasive in the neighborhood, the suit asserts, that corporate management must have participated or condoned them.

Beazer, an Atlanta-based company, is one of the nation's largest home builders.

"This is an abuse-of-trust case," says Charlotte lawyer Ken Davies, whose firm represents the mostly first-time homebuyers.

"Our clients all say, `I should never have bought this house, but I was told I could afford it and I could qualify for a loan. ... ' They had a right to rely on the professionals to guide them appropriately."

Charlotte lawyer Ken Bell, who represents Beazer, declined to comment on the suit.

Sales agent Williams says he's done nothing wrong and believes all buyers were qualified for and fully informed about their loans. He says he followed all of Beazer's sales procedures in advising buyers. Beazer started selling homes in the development in 2002.

"Beazer is a large corporation, and they do have a very aggressive approach on everything they do ... ," says Williams, now an independent agent. "But I don't think it was to the point of concealing or misrepresenting anything. They were trying to find a loan for people who couldn't otherwise get a loan."

The suit, filed in Mecklenburg Superior Court, seeks compensation for homebuyers' losses and punitive damages from Beazer.

As a result of the company's actions, the suit says, buyers suffered a variety of problems. One lost her home in foreclosure, and one filed for bankruptcy. Most buyers have taken on other debts to keep up with escalating mortgage payments they say weren't clearly disclosed.

Buyers have suffered a decline in property values, as Beazer's practices led to rampant foreclosures in Oak Hill, the suit says.

"People are trapped in their homes because their values have dropped below what they owe," says Davies' legal partner Daniel Grist. "All the foreclosures have flooded the neighborhood with cheap houses."

At least 14 of 98 homes in Oak Hill have fallen into foreclosure, a 14 percent foreclosure rate, an Observer analysis shows. Nationally, less than 3 percent of home purchases end in foreclosure.

Plaintiff Gary Morgan, a computer programmer, took a night job as a parking attendant at the Westin Hotel, but he still couldn't keep up with escalating house payments. His home is set to become Oak Hill's 15th foreclosure after a recent auction.

"I tried my best to hold on as long as I could," says Morgan, 35. "Now I'm moving my stuff out and trying to sell my furniture. I'm selling anything I can."

Morgan believes he was misled about how high his payments would go under his loan.

Oak Hill's foreclosure rate is not among Beazer's highest in Charlotte. The Observer found 10 Beazer subdivisions with rates of 20 percent or higher. But Oak Hill is newer and could suffer more defaults as interest rates and payments climb.

At least three other homeowner lawsuits -- two in the Charlotte area -- target Beazer's sales and mortgage practices. Shareholders have also sued Beazer seeking damages for the rise and fall of the company's stock price. The stock closed at $23.44 Tuesday, its lowest closing price in more than four years.

The Oak Hill suit says Beazer targeted low-income people in apartment complexes.

Sales agent Williams interacted directly with all but two of the homebuyers, their lawyers say, arranging loans through Beazer Mortgage, Bank of America and BB&T.

The suit will likely raise questions about what role buyers played in their own financial troubles.

Some signed loan applications that contained inaccurate information about their financial status, and some didn't carefully read documents that spelled out loan payment terms.

Several of the homebuyers received second mortgages they say were explained to them as "gifts" to help with their down payments. But each signed documents detailing that the money came from a government assistance program that requires full or partial repayment if buyers sell or refinance for extra cash within 10 years.

Williams says he did his best to answer the constant barrage of questions from first-time buyers.

"At some point there has to be some personal responsibility ... ," says Williams. "I think everyone was fully informed." www.charlotte.com/foreclosure

In a four-part series, the Observer found Beazer Homes USA sometimes crossed the line between selling to people who could barely afford homes and selling to people who couldn't. Ten Beazer developments in Mecklenburg have foreclosure rates of 20 percent or higher.

An online map allows you to scan Mecklenburg developments for foreclosures.

LIZ CHANDLER & BINYAMIN APPELBAUM

Related Content:

The number of foreclosures in Mecklenburg County has spiked since 2003. That's due largely to increasing foreclosures in neighborhoods of new starter homes, shown on the map in red.

The Observer defines starter homes as homes built in the last decade, with a county appraised value of less than $150,000. There have been more than 2,600 starter-home foreclosures since 2003.

The more than 8,700 squares on this map represent Mecklenburg single-family home foreclosures from 2003 through 2006. While starter-home foreclosures account for only 30 percent of the total, the increase in starter-home foreclosures accounts for most of the increase in the total number of Mecklenburg foreclosures during that period.

The Observer extracted this information from Mecklenburg County property and sales data. A foreclosure occurs when an owner falls behind on mortgage payments and the home is seized and sold to pay the debt.

For more information about Mecklenburg's public property records, visit the county's Web site.