In light of scandal-ridden Wall Street and an escalating unemployment rate, it’s no surprise that consumer confidence continues to fall. Americans certainly don’t feel comfortable opening up their wallets when we’re bombarded with news of corporate schemes and scandals that mock the intellect of consumers and negate their trust in corporations.
Consumer rights strike a cord within our firm and we recently filed a case in California against Pulte Homes, (NYSE: PHM) claiming the “one-stop shop” for homes engaged in a sophisticated scheme to control the entire home buying process. We allege in our lawsuit that Pulte used an integrated business model to create a self-sustaining microcosm with high prices and high sales to boost profits while trying to avoid the housing meltdown.
One-stop shopping sounds good in some circumstances because it makes life easier. We see the success of this model in Fred Meyer, Target and other national all-in-one retailers.
Yet, for a California homebuyer, that sentiment could not be farther from the truth. In fact, in our suit against Pulte, we claim that the company cost California homeowners dearly as it pushed them into dangerous loans that they would never qualify for with another lender, resulting in damaged credit, foreclosures and more.
We contend Pulte used gimmicks and discounts to entice homeowners to sign quickly. For the named plaintiff, they touted a $75,000 discount, and threatened to take it away when she asked for more time to think about the commitment. She felt rushed to accept their offer and expressed concerns about affording the mortgage and using other mortgage companies, but those worries fell on deaf ears.
During the loan process, our plaintiff received no explanation of the terms. No lender representative was present at the signing to answer questions, and, to top it all off, English is her second language - leaving room for confusion and misunderstanding during an already stressful transaction.
High pressure, empty promises, risky loans and inflated pricing – that sums up the home buying experience you can expect with Pulte, we allege.
In our suit, we claim Pulte attempted to disguise that loans were going to unqualified, high foreclosure risk borrowers by encouraging buyers to provide inflated stated and unverified income, not requiring a substantial down payment, underwriting sub-prime loans for buyers with bad credit, providing cash incentives to buyers and more.
Since Pulte controlled those looking at the applications, no questions were asked and no red flags raised when the company knew these people wouldn’t be able to repay.
Pulte did itself and homeowners a huge disservice when it tried to boost profits. Now, the builder’s neighborhoods are full of foreclosures and abandoned properties creating little curb appeal to potential buyers.
Ironically, 60 percent of Pulte’s sales occurred in Arizona, Florida, California and Nevada – states with the highest foreclosure activity in the nation. Does anyone smell predatory lending practices here?
We allege that the company set these homebuyers up for failure – convincing them they could own homes realistically valued at prices far above their means. The resulting foreclosures that took place in Pulte neighborhoods brought a steep decline in home values – more than 50 percent, crash landing around $230,000.
At HBSS, we believe this is a perfect example of predatory lending and behavior that causes consumer distrust in the first place.
Though we only have one case filed in California, we’re investigating the possibility of similar cases in Nevada and Arizona. We’re interested in hearing from Pulte homeowners in California, Nevada and Arizona.
If you would like to share your experience with us, please e-mail email@example.com or visit our Web site at www.hbsslaw.com/pulte or www.hbsslaw.com/pultehomes. We also encourage your thoughts and comments on the blogs. Start the discussion – I think you’ll be surprised at how many other homeowners are in the same sinking boat.