Feds probing "potential fraud" at Beazer

NEW YORK (Reuters) - Authorities are investigating the lending practices at Beazer Homes USA Inc. (BZH.N: Quote, Profile, Research), BusinessWeek reported on Tuesday, sending shares in the sixth largest U.S. home builder almost 17 percent lower.

Beazer Homes said in a statement it could not comment on or verify any investigation, but added that it would "fully cooperate with any investigation by any government agency".

BusinessWeek said the North Carolina field offices of the Federal Bureau of Investigation, the Internal Revenue Service and the Justice Department recently opened a joint probe into the home builder's lending practices.

A representative at the FBI's office in Charlotte, North Carolina, told Reuters late on Tuesday that the agency was "conducting a potential fraud investigation" regarding Beazer, but had no other comment.

Atlanta-based Beazer focuses much of its business on first-time home buyers.

The Inspector General of Housing and Urban Development (HUD) is also part of the investigative group because a large number of Beazer's loans were made to low-income borrowers and insured by the Government National Mortgage Association, BusinessWeek said.

The U.S. attorney's office in Charlotte, North Carolina, would neither confirm nor deny an investigation into Beazer, a spokeswoman said.

The HUD inspector general's office would neither confirm nor deny a probe.

The investigation follows a series of articles published by The Charlotte Observer newspaper in March, which detailed allegations of abusive lending practices and high foreclosures in a number of Beazer developments, BusinessWeek said.