California Loans News

A California homeowner filed a class-action suit against Pulte Homes alleging the latter to fraudulently propping up home prices and sales in a “house of cards” scheme. The scheme eventually caused values in its developments to plummet. The Pulte Homes is the nation’s largest home builder company.

The lawsuit was filed under the U.S. District Court in Northern California. The builder company was alleged that its “one-stop shopping” business model allowed it to put homes on the market at inflated prices. The complaint also contained details that through the Pulte Homes’ business model, sales, financing, settlement services and appraisals were controlled. The buyers are then given mortgages they could not afford. The suit stated, “Since Pulte Mortgage, Pulte’s financing subsidiary, quickly sold its loans on Wall Street, it was not affected when buyers defaulted.”

Spokesperson for the Michigan company Jacque Petroulakis said, “Pulte Homes believes the allegations are without merit and we will vigorously defend the case.”

Lead attorney in the case Steve Berman said that some of Pulte’s development projects have become “toxic subdivisions with foreclosure signs all over the place, homes not taken care of, and no chance that the prices will go back up.” Berman also said that Pulte “lured unqualified buyers – such as the case’s named plaintiff Sodalin Kaing, who earns $21 an hour but bought a house for $518,215 – with the promise of large discounts if they used Pulte Mortgage.”

The suit is on behalf of every homeowner who has bought a Pulte home in state from January 1, 2005 to March 1, 2007. Homeowners could learn more about the suit at www.hbsslaw.com/pultehomes. Berman added that the case may be expanded to include developments of the builder company in Nevada and Arizona.

Berman’s firm, Seattle-based law firm Hagens Berman Sobol Shapiro, also has pending class-action suits against KB Homes and Countrywide Financial. These two were alleged that they have performed a scheme to drive up home prices.

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