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The Charlotte Observer's "Sold a Nightmare"

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By Kelly Carr

The sub-prime crisis hadn’t yet captured national attention, but Binyamin Appelbaum, a reporter for The Charlotte Observer, noticed a strange pattern while compiling a list of foreclosed homes in North Carolina’s Mecklenburg County --clusters were concentrated in new developments. Appelbaum wondered if faulty loans were behind the trend.

Once he started digging, Appelbaum found a Beazer Homes USA subdivision in Mecklenburg called Southern Chase where 77 of 406 homes had gone into foreclosure. Appelbaum soon discovered the problem also spread through some of Beazer’s other communities so he talked to homeowners and scanned through mortgage documents.

The paper trail indicated that Beazer had violated federal lending rules. The company, according to Appelbaum, falsified information to allow people who could not afford a home to still purchase in the subdivision.

The year-long investigation led to The Charlotte Observer’s four-part series, “Sold a Nightmare,” which identified signs of the sub-prime lending crisis well before the topic dominated national media coverage. The series received an honorable mention in the 2007 Barlett & Steele Awards for Investigative Business Journalism.

“We literally went door to door asking people to share their stories with us and show us their documents,” Appelbaum said. “These were not public records. If you want people’s mortgage paperwork, you have to go ask them. Through the papers, we began to get clarity about what was happening in that neighborhood.”

With help from Observer reporters Lisa Hammersly Munn and Ted Mellnik, Appelbaum showed how a homebuilder could use certain practices to cash in on first-time homebuyers.

“This is the single most important thing I’ve done in journalism so far,” Appelbaum said. “I measure that by the impact it had on people’s lives. We brought attention to something that was previously off people’s radars.”

Shortly after “Sold a Nightmare” was published, the reporters’ e-mail inboxes were packed and the phone would not stop ringing. Lawmakers in North Carolina passed new mortgage regulations in response to the series and federal and criminal investigations were launched into Beazer.

Appelbaum, who is now a business reporter at The Boston Globe, said the series was possible because the reporters were committed to the story.

Together, they created numerous databases, tracking the numbers until they understood what was happening. They knocked on the doors of hundreds of homeowners to understand the full picture and they worked on weekends, sometimes through the night, to get the story done.

That’s the type of commitment it takes, according to Appelbaum, to launch important investigations in the midst of daily reporting. He said reporters should also pay close attention to what’s happening locally.

“My experience is that if you want to do something like this, you start on it at night and on the weekends, you do it in the cracks between your other work,” Appelbaum said. “We focused tightly on something extremely local. You can have a meaningful role in public discussion by writing about your own community.”

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Comments

"Sold a Nightmare" was an excellent series. I hope the reporters who worked on it will continue to do work like that. Too few papers have the courage to print these stories or let reporters work on them. It's easy to tell that many so called news articles are just industry press releases, not fact finding. I've known of reporters who got the ax after exposing fraud or corruption in the housing industry, because their employer didn't want to offend advertisers. I've seen far too many watered down stories about bad builders, that nearly always end with useless canned advice that has already failed people. I hope to see more stories like "Sold a Nightmare!"

Congrats. I see a Pulitzer finalist here. Local story that illustrates the core of destruction of global wealth and the weakening economy.
Good Luck.
-Paul Kuroda

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