Following reports of high foreclosures in at least 10 Beazer Homes USA developments in Mecklenburg County, Charlotte elected officials say they have received assurances from the company that its new projects won't have the same results.
"I'm not being paid to justify anything for Beazer. But I will tell people what they told me," council member Michael Barnes said during a zoning meeting Monday night. "The leadership of the Beazer company that was responsible for the debacle that occurred some years back with respect to starter homes has changed."
Barnes and other City Council members say the company also has told them it has shifted toward development of more expensive homes, which are less likely to foreclose.
An Observer series last month charted how Beazer's aggressive sales tactics contributed to unusually high foreclosure rates in many of its low-priced Charlotte-area developments. The troubled developments had foreclosure rates above 20 percent. The national rate is about 3 percent.
Responding to the Observer series, the FBI announced it was launching a criminal investigation into "potential fraud" by Beazer, working with the Internal Revenue Service and the federal Department of Housing and Urban Development.
Beazer has said that it followed all laws and that an internal investigation as of March 28 had found no evidence to support the Observer's findings. Beazer executives in Charlotte and the company's Atlanta headquarters did not respond to the Observer's repeated requests this week for interviews.
But the company is talking with Charlotte officials.
Charlotte City Council members say they are concerned about high foreclosure rates in Mecklenburg County, the highest in the state, and about Beazer's role.
They say they are lobbying congressional representatives to pass tougher mortgage laws and are looking for ways to help neighborhoods hurt by high rates of foreclosure.
At a March hearing about the same rezoning request, Beazer's Chris Robusto and an attorney representing Beazer, John Carmichael, answered the council's questions and comments.
Mayor Pro Tem Susan Burgess told them that cities want new federal banking regulations "to prevent the kind of predatory lending that's going on by your company and others."
"I hope this does not happen in Charlotte again," she said.
"We concur," replied Robusto, Beazer's vice president for land acquisition.
On Monday, the council approved Beazer's rezoning request, allowing the company to build 70 townhomes in northeast Charlotte.
Beazer's leadership in its Charlotte office has changed in the past two years. The company hired Tom Bruce as the new president for its Charlotte division in 2005.
Since 2001, Beazer has employed the same president, Scott Thorson, for the region that includes the Charlotte division.
Before that, Thorson served as president of the Charlotte division, overseeing the company's emergence as one of the largest builders of low-cost, starter-home neighborhoods in the Charlotte area.
Beazer's CEO, Ian McCarthy, has held his job since 1994.
The company continues to arrange down payments and to pay closing costs for some of its buyers. The Observer found both of those practices were associated with higher rates of foreclosure.
Council members Barnes and Anthony Foxx said they met individually with Beazer representatives in recent weeks about the company's rezoning request in Barnes' district.
Foxx, an at-large council member, said his talks revolved mostly around the townhome development.
The company pointed out that prices there would range from $185,000 to $215,000, well above those for starter homes. Foxx said he conveyed his worries about mortgage loans to buyers with bad credit.
Beazer Mortgage, which is part of Beazer Homes, arranges loans for most buyers in the company's subdivisions. Foxx says he told company officials that "people are relying on you for advice on what product to seek. If they aren't savvy enough to know what all the options are, they're at a disadvantage."
Asked whether Beazer talked about how it came to build 10 Mecklenburg developments with high foreclosure rates, Foxx replied: "I would just say that they tried to explain their position and put the best face on it they could."
Burgess said she didn't meet privately with Beazer representatives. But she believes city officials are making their point.
Beazer "certainly has a bad history in Mecklenburg County with foreclosure issues," Burgess told the Observer this week. "But I think that they've heard the message loud and clear that we're very concerned about that and don't want that kind of practice going on in our city."












