Number Five on the Ten Most Wanted Culprits of the Collapse
COOPER: That's our "Ten Most Wanted List: The Culprits of the Collapse." So far we have named five names; men who've helped create the crisis that put your family's financial security and our whole country in jeopardy. Very few people are stepping up to take responsibility, you might have noticed. That's one of the frustrating things about this crisis. We think it is important that you know who got us into this mess. We promised to keep naming names and tonight we take a look at a big home building company; Beazer Homes, U.S.A. They are added to our list. Here is Gary Tuchman.</s>GARY TUCHMAN, CNN CORRESPONDENT: Faith Tennyson only wanted a safe home for her son.</s>FAITH TENNYSON, HOMEOWNER: I lived in a 550-square foot one bedroom apartment just around the corner.</s>TUCHMAN: Then a sales agent pitched what seemed a dream opportunity.</s>TENNYSON: He said don't worry. You are going to get in your house. We will pick out your lot today. I picked out my lot the same day.</s>TUCHMAN: He was selling houses in a Charlotte, North Carolina subdivision for Beazer Homes, USA; one of the nation's largest home builders. Beazer was also a mortgage broker at the time, arranging your loan to buy the house. Beazer did the same in other North Carolina developments. Tell me how you felt as a young pregnant couple when this woman told you, you can afford this house?</s>LEA TINGLEY, HOMEOWNER: Oh, my gosh, I cried. I was so happy because I was like, this is it.</s>MARK TINGLEY, HOMEOWNER: Finally.</s>L. TINGLEY: My life is perfect.</s>TUCHMAN: Lee and Mark Tingley say Beazer paid part of their mortgage for a year to help them qualify. Then payments skyrocketed, more than they were told.</s>L. TINGLEY: We sold a lot of things to make the mortgage payment.</s>TUCHMAN: What did you sell?</s>L. TINGLEY: Gold coins that have been passed down in my family, heirlooms.</s>TUCHMAN: The Tingleys and Faith Tennyson say they later found in their mortgage applications information that didn't match what they told Beazer agents; inaccuracies that inflated their income and reduced their debt. An investigation by the "Charlotte Observer" found a pattern of such inaccuracies on Beazer applications that helped low income home buyers get mortgages.</s>REP. BRAD MILLER, (D) NORTH CAROLINA: This is an unusual circumstance of a builder who is getting people into loans they can't afford so they can sell houses.</s>TUCHMAN: Many could not make the payments. Now in ten Beazer developments here, one of five homes is being foreclosed on, dragging down the value of other homes. The Tennyson and the Tingley homes are worth less than their mortgages. It's a scenario that inflicts many neighborhoods across the country. Property is allowed to deteriorate. Crime increases. That is often what foreclosures foreshadow. Why would Beazer agents arrange mortgage that home buyers now say they couldn't afford? The Tingleys, Tennyson and others say it's because Beazer gets paid when it sells a house, even if the buyer defaults. The government insures the mortgages and you the taxpayer foot the bill. Many families have sued Beazer including the Tennysons and Tingleys. The Tingleys plan to appeal the dismissal of their suit which they say was unjustified. We asked Beazer why so many of its houses have been foreclosed on. The company declined an interview but it's "vigorously defending against the lawsuits." The FBI, the IRS and other federal officials are investigating potential fraud. Beazer says it has fully cooperated. An internal investigation found evidence that employees violated federal regulations back to at least 2000. Both families say they are barely holding on. Because their houses are worth so little, they can't afford to sell them and leave.</s>L. TINGLEY: We are stuck here. We can't do anything about it.</s>TUCHMAN: And that's why Beazer is one of our "Ten Most Wanted Culprits of the Collapse." Gary Tuchman, CNN, Charlotte, North Carolina.</s>COOPER: Well, we believe in naming names. Ian McCarthy is the CEO and president of Beazer Homes, USA. And according to "Morning Star," his total compensation last year was nearly $5 million. In 2006, we should point out, it was $22 million. So let's make it official; Ian McCarthy now joins our "Ten Most Wanted Culprits of the Collapse." We began last week with Joe Cassano from AIG, followed by Richard Fuld from Lehman Brothers, Chris Cox from the SEC, Senator Phil Gramm of Texas and former chairman of the Federal Reserve, Alan Greenspan. Back on the campaign trail; early polling giving McCain a win in the fourth showdown between the two presidential candidates. Yes, I said the fourth one. It happened just about an hour ago at an event here in New York City. Take a look.</s>MCCAIN: I just call him, "that one." He even has a pet name for me, George Bush.</s>COOPER: More of the McCain/Obama showdown for laughs when we continues.