The unemployment rate in the Houston – Sugarland – Baytown statistically area increased 1.1%  in June to 8%. The unemployment rate for the state rose to 7.5% up from 7.1% in May. Overall Texas is well below the 9.5% national unemployment rate but obviously unemployment rate for Texas is increasing significantly. Employment has huge affects on commercial real estate.  The increase in the unemployment rate shows a large contraction is business activity in the Greater Houston Area.  Companies laying off employees impacts  the office sector of commercial real estate the most because there is less demand for space for employees. Overall the demand for class A office space in the 1st Quarter for 2009 was high but vacancies in class B & C space is on the rise.

Texas Workforce Press Release

Beazer Homes a home builder with numerous developments throughout Houston settled with federal prosecutors accepting  responsibility for  fraudulent mortgage origination and accounting practices. The company agreed to pay $10 million to victims and $50 million as the company. Beazer also settled with HUD for $4 million with an additional $1 million payment on the first anniversary of the agreement.  Here is the Chronicle article.

ATLANTA — Federal prosecutors in North Carolina filed criminal fraud conspiracy charges against Beazer Homes USA today, but they agreed to dismiss the case if the company complies with an agreement accepting responsibility for certain wrongdoing and pays millions to victims.

In the deferred prosecution agreement, the company accepted responsibility for fraudulent mortgage originations and accounting practices and agreed to pay $10 million immediately toward restitution to victims. Beazer also agreed to pay up to $50 million as the company, which has been battered by the housing downturn, recovers financially, according to prosecutors and court records.

The deferred prosecution agreement is in effect for five years. A spokeswoman for prosecutors, Suellen Pierce, said that the charges against the company will be dismissed if it complies with the agreement.

Beazer said Wednesday that it also reached a settlement agreement with the Department of Housing and Urban Development and the civil division of the Department of Justice. The company also said several of its subsidiaries have entered into a settlement agreement with the North Carolina Real Estate Commission.

Under the terms of the settlement agreement with HUD and the civil division of the Department of Justice, the company said it will make an immediate payment of $4 million to HUD to resolve civil and administrative investigations. In addition, on the first anniversary of the agreement, the company will make a $1 million payment to HUD.

“We deeply regret these matters and have used what we have learned to strengthen our control and compliance culture and reinforce our absolute commitment to act according to the highest standards of ethical conduct throughout our organization,” Ian J. McCarthy, Beazer’s president and chief executive officer, said in a statement.

In February 2008, Beazer exited the mortgage business and in May 2008, it completed the restatement of certain prior period financial statements and implemented changes in its internal controls over financial reporting.

The company said today’s settlements will allow it to close “an unfortunate chapter in its history.”

The Atlanta-based homebuilder has been under scrutiny for certain business and financial practices.

Earlier today, the Securities and Exchange Commission said it had filed civil charges against the former chief accounting officer at Beazer Homes, accusing him of committing fraud and misleading company auditors.

In a criminal information filed in federal court in Charlotte, prosecutors accuse the company of accounting fraud conspiracy and mortgage fraud conspiracy.

In the SEC case filed in Atlanta, the agency said today that Michael T. Rand of Sandy Springs fraudulently decreased Beazer’s reported net income by recording improper accounting reserves during certain periods between 2000 and 2005.

The SEC’s complaint charges Rand with violations of the antifraud, reporting, books and records and internal control provisions of federal securities laws. It seeks a permanent injunction, disgorgement of ill-gotten gains and a financial penalty. The agency also is seeking a court order barring Rand from acting as an officer or director of any public issuer.

Houston Beazer Neighborhoods

Beazer’s Statement