Shares of Beazer Homes USA Inc. (NYSE: BZH) fell more than 9 percent on Wednesday, after the company announced it had the FBI began an investigation related to the firm's mortgage business.
The firm said it was cooperating with prosecutors' requests for documents, adding that there had been no allegations of wrongdoing, despite news reports that it had been making loans to low income lenders who could not afford to repay.
The Atlanta-based company says it is committed to conducting business in an honest ethical and lawful manner.
The report comes amid a steep downturn in the housing market and losses suffered by firms who offer loans to so-called 'supbrime' borrowers whose poor credit status will not allow them to receive traditional loans.
Recently, several of the largest housing companies, including Lennar Corp. and KB Home have reported that difficulties in the subprime lending sector have contributed to dragging down an already weak market.
Shares in Beazer dropped $3.04, or $9.68, to $28.37 in afternoon trading on the New York Stock Exchange.