In the past decade, Beazer Homes USA built more houses in Mecklenburg County that have since foreclosed than any other builder.
Beazer built about 2,900 homes in Mecklenburg between 1997 and 2006. At least 388 have foreclosed. That is a rate above 13 percent, the highest among the county's 10 most prolific builders during that period, an Observer investigation found.
Nationwide, less than 3 percent of buyers lose homes to foreclosure.
The Beazer foreclosures are concentrated in 10 developments, each of which has a foreclosure rate of 20 percent or higher. Together they contain about 1,150 homes and at least 280 foreclosures.
The neighborhoods sit in a crescent stretching from southwest Mecklenburg through north Charlotte to the county's eastern edge. The same area contains most of Mecklenburg's foreclosures.
All were built in a similar style: Small lots holding small vinyl-sided houses set on concrete slabs. They were marketed mostly to first-time home buyers. Prices started below $100,000 and usually topped out just above $150,000.
Two other similarities have produced the high foreclosure rates: Some buyers received larger loans than they could afford, and home prices generally stayed flat or declined. People who couldn't pay their loans and couldn't sell their homes fell into foreclosure.
Foreclosures are personal disasters, but it is increasingly clear that clusters of foreclosures damage entire neighborhoods. Home prices drop. Additional foreclosures result. Renters move in. Crime can rise.
"It was a disaster," says Veronica Wilkes, who bought a house from Beazer in 2001 in the northwest Charlotte subdivision of Brookmere.
Beazer built 31 homes on her street. Thirteen have foreclosed.
"There was trash all over the streets, kids walking through your yard," says Wilkes, who now rents out her home because she can't sell it. "You could tell the homeowners -- their yards were nice and pretty, and the other yards were terrible."
A story in Sunday's Observer charted the impact of foreclosures on Southern Chase, a Cabarrus County neighborhood where Beazer built 406 homes. Seventy-seven of the homes have foreclosed, a rate of 19 percent.
In a written statement, Atlanta-based Beazer originally said the foreclosure rate in Southern Chase was an anomaly.
When the Observer presented its findings about the 10 Mecklenburg developments with higher foreclosure rates, Beazer referred to its earlier statement. The company said its developments were marketed to first-time buyers, who tend to foreclose more often.
Beazer also said that it "is committed to providing quality homes of superior value and providing each and every homeowner with an enjoyable customer experience."
The company's CEO, Ian McCarthy, declined to speak with the Observer.
Beazer's troubled developments were backed by a silent partner: the federal government.More than 70 percent of the buyers in the 10 developments used loans insured by the Federal Housing Administration. The FHA encourages mortgage lending to lower-income families by promising to pay the lender if the borrower does not.
In one of the developments, Back Creek Hollow in northeast Mecklenburg, 64 of 70 buyers used FHA-insured loans. Seventeen of those homes have since foreclosed, a rate of more than one in four.
The largest source of FHA loans in the Beazer developments was Beazer itself.
A subsidiary called Beazer Mortgage acted as a broker, matching buyers with lenders for a fee of several thousand dollars on each loan.
The FHA loans that Beazer Mortgage arranged often were aggressive. The company provided down payments for most of its borrowers, leaving them with little stake in the homes. It also arranged loans with monthly payments that started low but rose sharply after the first and second years, a feature known as a buydown.
Both down-payment gifts and buydowns were associated with a higher risk of foreclosure, the Observer found.
Beazer and Eastwood Homes built on the same streets in Steelecroft Place, a subdivision in southwest Charlotte. Eastwood built slightly more than half the subdivision's 360 homes; Beazer built the rest. The houses are intermixed, sometimes on alternating lots.
Twenty percent of the Beazer homes have foreclosed, compared with 8 percent of the Eastwood homes.
The prices were similar. The Beazer homes have an average tax value of $138,000; the Eastwood homes, an average of $147,000.
The financing was different. Two-thirds of Beazer's buyers used FHA loans with low introductory payments that increased after the first and second years. About 5 percent of Eastwood's buyers used that kind of FHA buydown loan.
In a written statement, Beazer said that it followed all laws and regulations and that offering financial assistance to first-time buyers was a common industry practice.
The company also emphasized that it acts solely as a mortgage broker and that loans are ultimately approved or rejected by the lender. The company said buyers are informed of loan terms and sign documents at the closing table to indicate their understanding and acceptance.
Low cost, big problems
The county's foreclosure problems are concentrated in new neighborhoods with the lowest prices.
Derhyl Pruitt, a local real estate agent, said he tells first-time buyers, "If you can possibly stretch to pay $180,000, that will eliminate the problems."
Beazer itself built some developments in slightly higher price ranges. Those homes are relatively untouched by foreclosures.
In Beazer's 13 developments with average tax values above $150,000, less than 5 percent of homes have foreclosed.
In the 20 developments with average tax values below $150,000, almost 18 percent of homes have foreclosed.
The Beazer development with the highest foreclosure rate was in the Avensong subdivision, in eastern Mecklenburg County.
Beazer built 155 homes in a section called Stewarts Crossing between 1999 and 2001. Fifty-two of those homes have foreclosed.
Avensong also contains a section of about 160 houses built by Colony Homes and sold at higher prices. Twelve of those homes have foreclosed.
Karen and Loren Pittman have watched with alarm as one-third of their neighbors fell into foreclosure.
The Pittmans moved to Stewarts Crossing in May 2000. They paid $119,500 for a house with three bedrooms and 1,295 square feet.
They wanted a low-priced home so Karen could quit work and raise their children.
The next year, the county cut the tax value of the house by 11 percent to $106,100.
The couple have watched renters move in. Karen worries about her safety and doesn't walk on some streets. Tax values are rising now, but the Pittmans aren't sure that will carry over to sales prices.
"I would never buy into a neighborhood like this one again," she said. "We had no idea anything like this could happen."