Builder - November 2008 - (Page 53)

UPDATE F IN A NCI A L M A N AGEMEN T & OPER AT ION A L S T R AT EGIE S ■ BUSINESS 54 Inside: Spanish Edition The NCCER begins to translate its training manuals and assessment exams into Spanish PLUS MORE > > EDITED BY ETHAN BUTTERFIELD LEGAL ISSUES Dangerous Incentives An FBI investigation takes aim at builders. B matt wood uilders beware: The FBI is looking into 21 companies concerning mortgage and subprime issues, and rumors are swirling that the focus of the investigation is home buyer incentives offered by builders throughout the housing bust. A Wall Street Journal story in August gave some details of the investigation and named Centex Corp. and Beazer Homes USA as two companies that used questionable incentives. Beazer declined to comment for this story. While Centex would not say if it is under FBI investigation, the company acknowledges that between late 2005 and June 2006, its Las Vegas division agreed to pay off consumer debts on items such as credit cards, car loans, and mortgages after closing on about 50 homes ranging in price from $350,000 to $550,000. The practice, which was not always disclosed to lenders and was limited to Centex’s Las Vegas operation, was discovered internally in June 2006 and was immediately discontinued. “These incentives did not reﬂect our standard corporate practice,” Centex spokesman Eric Bruner says. “Since that time in 2006, we have centralized and standardized many of our business practices, increased training, ensured compliance, and adopted a pricing model that greatly reduces our use of incentives to sell homes.” Centex has reached out to the investors who bought the loans in question, “and we’ve told them we will stand behind each loan,” Bruner says. Problems with incentives often begin when decisions about them are made in division offices without legal counsel, says attorney Samuel Alhadeff, a partner in the Temecula, Calif.–based ﬁrm Buchanan Ingersoll & Rooney, which represents several public builders, including Centex. Bruner declined to say if the company did or does now check with its corporate lawyers or outside legal counsel when considering incentives, and he also declined to say if those responsible for the Las Vegas (see page 54) policies were disciplined. W W W.BUILDERONLINE.COM nov e m ber 2 0 08 B U I LD E R ■ 53 http://WWW.BUILDERONLINE.COM

Table of Contents Feed for the Digital Edition of Builder - November 2008

Builder - November 2008 Contents Editor’s Notes B-Mail Book It Missing Links Inside Story Top Shelf Green House Business Update Sales Strategies Industry Insight Products Tech Tools National Best Seiders' Economy Sifting Through the Ruins Cottage Industry Upside Down Ad Index Last Word

Builder - November 2008

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