The Consumer Financial Protection Bureau (CFPB) has initiated legal proceedings against Vanderbilt Mortgage & Finance, a subsidiary of Berkshire Hathaway, citing allegations of predatory lending practices that placed borrowers in precarious financial positions. According to reports, the CFPB claims that Vanderbilt routinely overlooked significant indicators that the loans were unaffordable for borrowers purchasing manufactured homes. The agency's lawsuit reveals disturbing examples, including a case where a loan was approved for a family already carrying 33 debts in collection, leading them to fall behind on payments within just eight months of the mortgage being granted. As stated by AP News, CFPB Director Rohit Chopra remarked, "Vanderbilt knowingly traps people in risky loans in order to close the deal on selling a manufactured home."

Vanderbilt, which operates under Clayton Homes—the largest manufacturer of manufactured housing in the U.S.—is accused of manipulating its lending criteria to approve mortgages for borrowers who showed inadequate income. The CFPB noted that Vanderbilt utilized artificially low estimates of living expenses, allowing loans to be sanctioned even when borrowers clearly struggled to meet obligations. The CFPB's allegations echo past concerns regarding Clayton's lending policies, as several investigations have criticized the company for similar reasons.

In their defense, a strategic representation firm for Vanderbilt dismissed the CFPB's claims as “unfounded and untrue,” asserting that Vanderbilt's loan assessments meet or exceed legal standards. They emphasized that their practices incorporate comprehensive analyses of borrower's debt-to-income ratios, adhering to guidelines comparable to those of the Federal VA loan program NPR.

Mike Calhoun, president of the Center for Responsible Lending, expressed ongoing concerns about Vanderbilt's practices, highlighting that the interest rates on loans for manufactured homes tend to be significantly higher than those for traditional housing. He noted that the median household income for manufactured home buyers remains low, with many facing multiple financial hurdles.

The CFPB's lawsuit not only seeks to safeguard potential homebuyers from such practices but also aims to support legitimate lenders striving to provide affordable housing options. The broader implications of the CFPB's action underscore the regulatory agency's commitment to holding lenders accountable for their underwriting practices.

Concerns surrounding Clayton Homes and its lending operations are not new, with past reports indicating that the company engaged in high-interest financing, often leading consumers toward unfavorable financial decisions. During an earlier shareholder meeting, Buffet staunchly defended Clayton's practices, asserting his unwavering confidence in their approach.