The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Vanderbilt Mortgage & Finance, a Berkshire Hathaway subsidiary, alleging the company knowingly facilitated risky mortgages for manufactured home buyers. The CFPB claims Vanderbilt ignored clear signs borrowers couldn't afford the loans.
The lawsuit, filed Monday, details instances where Vanderbilt approved loans to families already burdened with significant debt, leading to financial hardship within months. One example cited involved a family with 33 outstanding debts, who struggled to make payments just eight months after loan approval.
CFPB Director Rohit Chopra stated the company intentionally placed borrowers in precarious positions to secure the sale of manufactured homes. Vanderbilt's spokesperson confirmed the company is reviewing the lawsuit but declined immediate comment. Clayton Homes, also a Berkshire Hathaway subsidiary and the nation's largest manufactured home builder, did not immediately respond.
This isn't the first time Clayton Homes has faced scrutiny. A decade ago, allegations of predatory lending surfaced, but Warren Buffett defended the company's practices, claiming adherence to all regulations. Following the 2008 financial crisis, stricter lending requirements mandated income verification and a good-faith assessment of borrowers' repayment ability.
The CFPB's lawsuit contends that Vanderbilt disregarded these requirements. The agency alleges manipulating lending standards to approve loans where borrowers lacked sufficient income or relied on unrealistic expense estimations.
Berkshire Hathaway, a diversified conglomerate, owns a range of businesses beyond manufacturing, including utilities, insurance companies, railroads, and retail brands.
