Kaufman and Broad Home Corp. said Tuesday that it has discovered unauthorized mortgage loan trading activity by an employee of its mortgage banking subsidiary, Kaufman and Broad Mortgage Co.
The company said it expects to report record third-quarter and full-year earnings, despite an estimated 24-cents-per-share reduction in earnings for the quarter ended Aug. 31 due to the unauthorized activity.
The company said that the loss at the mortgage unit was caused by a single employee, who has been fired. Analysts said they expect the company to earn 93 cents a share in the quarter, compared to 68 cents a year earlier, according to First Call/Thomson Financial.
Kaufman and Broad said its mortgage unit regularly sells loans into the market that match loan commitments to its homebuyers, a practice intended to hedge exposure to interest rate changes until loans are sold to the secondary market.
Michael Henn, Kaufman and Broad's senior vice president and chief financial officer, said the company's home building results are up, with preliminary unit orders rising 43% in August, compared to a year earlier.
Kaufman and Broad said it expects to be the largest home builder in the United States this year on the basis of number of homes delivered. Headquartered in Los Angeles, the company has divisions in California, Nevada, Arizona, New Mexico, Texas, Colorado, and Utah. It also is one of the largest home builders in France.