Vanderbilt Mortgage & Finance, part of Warren Buffett’s Berkshire Hathaway conglomerate, has been accused by the Consumer Financial Protection Bureau (CFPB) of manipulating underwriting standards and bankrupting borrowers on manufactured mortgages. has been done.
Consumer watchdog groups filed suit Monday in Tennessee District Court against Vanderbilt for violating the Truth in Lending Act and Regulation Z. Vanderbilt is a division of Clayton Homes, the largest home builder in the United States, and a subsidiary owned by Berkshire Hathaway.
CFPB Director Rohit Chopra said in a statement that “Vanderbilt knowingly places people into risky loans in order to close home sales transactions.” “The CFPB’s lawsuit seeks to protect not only homebuyers, but also the honest lenders who help people buy affordable homes.”
A Berkshire Hathaway spokesperson did not immediately respond to HousingWire’s request for comment. “Vanderbilt Mortgage is proud to serve families across America by making affordable homeownership a reality,” said a representative from Clayton Homes. The company is currently reviewing the CFPB complaint.
The complaint alleges that by using artificially low cost-of-living estimates, Vanderbilt ignored evidence that the borrowers did not have sufficient income or assets to repay the mortgages.
The lawsuit notes, for example, that the estimated living expenses the company considered in the underwriting process for some borrowers were about half the average self-reported living expenses of other similar Vanderbilt loan applicants.
After paying the mortgage, one family was left with a net income of $57.78 per month, according to the CFPB. Another family had 33 debts in collections, had two young children, and was delinquent just eight months after receiving their loan. The CFPB alleges that the company’s actions caused a single mother with two dependents to default on her mortgage payments after living in the home for just four months.
According to the CFPB, Vanderbilt “charged many borrowers additional fees and penalties when they defaulted on their loans, and some ultimately lost their homes.”
