Oct. 26, 2009 (PR Newswire) --

SAN FRANCISCO, Oct. 26 /PRNewswire/ -- A California homeowner filed a class-action lawsuit against Pulte Homes Corporation (NYSE: PHM) claiming the company engaged in a sophisticated and integrated fraudulent scheme to artificially prop up sales and home sale prices through convoluted control of the home sale process.

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The lawsuit, filed in U.S. District Court in Northern California, claims Pulte's business model provides 'one-stop shopping' for homebuyers, as the company controls the sale, financing, ancillary settlement services and appraisals in the home buying process. In an effort to avoid the housing market crash, Pulte used its business model to create a self-sustaining environment of high prices and high sales, despite national trends the suit claims.

The suit contends in order to sell homes at above-market values, Pulte placed buyers in loans that they could not afford while settlement and appraisal arms abandoned any presumed neutrality and took whatever steps necessary to ensure home sales closed at prices demanded by Pulte.

The complaint includes a quote from William J. Pulte, stating that in 2005, "In most of these cases, buyers have no idea how they're going to pay."

Despite the CEO's cautionary statement, the suit alleges Pulte lured unqualified buyers by promising them large discounts if they used the company's mortgage arm, Pulte Mortgage. When the named plaintiff, Sodalin Kaing, raised concerns about her ability to pay, Pulte sales employees pressured her to act quickly or risk losing a $75,000 discount the company offered.

"Pulte created an amazing opportunity for itself by closely manipulating all involved parties in the home sale process," said Steve Berman, lead attorney and managing partner at HBSS. "Pulte created a micro-environment inside the marketplace, where it could rig, falsify and inflate reports and pricing to its hearts content and no one had any idea what was happening."

"In my client's case the 'discount' offered was phony because it reduced the home's price from an already inflated number that was more than $50,000 higher than the appraised value," Berman continued.

Pulte pushed homeowners into dangerous loans and then quickly sold those loans on the secondary market immediately after closing for additional profits, the suit states. These practices created 'toxic subdivisions' populated with homes built and financed at inflated values, owned by homeowners who did not qualify for and could not service their loans, the suit continues.