Value Destruction

By Ramesh Akkineni
from an article in BusinessWeek
Even some home buyers who are content with their loans claim they've been injured by builders' lending to others. Robert V. Phillips, a lawyer in Rock Hill, S.C., represents residents of a subdivision in Columbia, S.C., who allege in a federal court suit that the value of their homes has fallen as a result of foreclosures stemming from Beazer's reckless mortgage practices with other customers. The suit, which seeks class-action status, claims that Beazer salespeople encouraged prospective buyers to "falsify information on loan applications." This made it "inevitable that the subdivisions...would experience a foreclosure rate which significantly exceeds the statewide average," and that has hurt the value of the plaintiffs' houses, the suit alleges.

Beazer has filed a motion to dismiss the action, noting that the plaintiffs don't claim to have been misled or directly harmed by the company. "The complaint," Beazer argues, "is based upon speculative allegations of causation and conclusory statements."

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