Pulte Homes Inc. (PHM:NYSE)

A California homeowner filed a class-action lawsuit against Pulte Homes Inc. 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. 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.' 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. The result of Pulte's actions to homeowners and the market was catastrophic resulting in foreclosures, a steep decline in home values, a loss of buyer's down payments, loss of mortgage payments and ruined credit, the suit states. In 2006, the suit states Pulte home prices ranged from $558,000 to $694,000. By the end of 2008, the company's predatory practices caused home values in this neighborhood to crash at $230,000, more than a 50% drop in value. The neighborhood is 'toxic' according to the complaint. The suit claims Pulte allowed and encouraged buyers to provide inflated stated and verified income as part of the loan process, did not require substantial down payments, provided underwriting on sub-prime loans for buyers with bad credit, financed buyers in adjustable interest-only loans and more. The suit names several claims against Pulte including violations of the California business codes including unlawful, fraudulent and unfair business acts and practices, negligent misrepresentation, and breach of implied covenant of good faith and fair dealing.

Pulte Homes Inc. expected to Report Fiscal Year 2009 Results on February 1, 2010. This event was calculated by Capital IQ (Created on November 5, 2009).

Pulte Homes Inc. reported unaudited consolidated financial results for the third quarter and nine months ended September 30, 2009. For the quarter, the company reported a net loss of $361.4 million, or $1.15 per diluted share, inclusive of approximately $86.7 million of charges and transaction costs associated with its merger with Centex Corporation and $163.8 million in inventory impairments and other land-related charges. The company also recorded a $47.4 million loss related to the debt retired in the quarter. For the comparable period in 2008, the company reported a net loss of $280.4 million, or $1.11 per diluted share, including impairments and land-related charges of $266.6 million. Consolidated revenue was $1.1 billion, compared with prior year revenue of $1.6 billion. Loss before income taxes was $358.72 million compared to $294.59 million for the same period last year. For the nine months, net loss was $1.1 billion, or $3.88 per diluted share, compared with a net loss of $1.1 billion, or $4.48 per diluted share, for the prior year period. Consolidated revenue was $2.4 billion, compared with $4.6 billion for the first nine months of last year. Reported results are inclusive of Centex for the period from August 19, 2009 through September 30, 2009. Prior year results have not been adjusted for the merger. Loss before income taxes was $1,057.89 million compared to $1,202.87 million for the same period last year.