Goodbye Frying Pan, Hello Fire!

Beazer Homes USA is adopting what some might see as an odd strategy to position itself for "when our markets begin to recover." The residential homebuilder is ending its mortgage origination service and turning, instead, to Countrywide Financial, as its preferred mortgage provider.

Countryside, the nation's largest provider of mortgages, has been rocked by financial difficulties stemming from risky home loans, and last month was bought by Bank of America.

Even so, Beazer's chief executive Ian McCarthy said his company's alliance with Countrywide "will position us well to take advantage of opportunities that will arise when our markets begin to recover."

McCarthy said that Beazer was, effective immediately, discontinuing Beazer Mortgage Corp., and ending its related mortgage services relationship with Homebuilders Financial Network. This follows news that its home closings declined 24 percent in the last quarter of 2007 from the same period in 2006. Net new home orders dropped 29 percent from the prior fiscal year.

Beazer is also exiting its homebuilding operations in five cities — including Charlotte, North Carolina, where it has had some legal troubles — although it said it would complete all homes under construction. It will, instead, enter the Northwest Florida market together with The St. Joe Company.

Beazer is "responding to what has been and what we expect will continue to e a challenging environment for homebuilding," said McCarthy.

by Elizabeth Olson