Beazer exits mortgage origination business

By Chelsea Emery

NEW YORK (Reuters) - Beazer Homes USA Inc (BZH.N: Quote, Profile, Research, Stock Buzz), struggling amid the slowdown in the housing market, said on Friday it would stop originating mortgages and would exit some homebuilding operations in four states to help cut costs and streamline the company's operations.

Shares of the Atlanta-based builder of single-family homes dropped as much as 5.8 percent after it said it would immediately discontinue its mortgage origination services through Beazer Mortgage Corp. It has also ended its related mortgage services relationship with Homebuilders Financial Network LLC.

Additionally, the seventh-largest public homebuilder is exiting some homebuilding operations in North Carolina, Ohio, South Carolina and Kentucky.

Beazer said it has entered into a new marketing services arrangement with Countrywide Financial Corp CFC.N, the nation's largest mortgage lender; Beazer will market Countrywide as the preferred mortgage provider to Beazer's customers.

"Given the increasing complexities in mortgage financing today, we believe working with an established leader in mortgage lending makes the most sense for our homebuyers and our business," said Chief Executive Officer Ian McCarthy in a statement.

The changes, part of an ongoing corporate review, will help streamline the company and better position it for a homebuilding recovery, McCarthy said. He added that the environment would remain "challenging."

"On the whole, we view these changes positively, as they will allow the company to focus its efforts and capital in more profitable markets," wrote UBS analyst David Goldberg in a note to clients. "That said, we believe they reflect Beazer's weaker positioning through the downturn versus peers."

Shares of Beazer were down 15 cents, or 1.7 percent, at $8.57 in early afternoon dealings after falling as low as $8.21. The stock has sagged 38 percent over the past 6 months.