OMAHA, Neb. — The federal Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against a subsidiary of Warren Buffett’s Berkshire Hathaway, alleging that the company overlooked significant indicators showing that borrowers were unable to afford the mortgages provided for purchasing manufactured homes from another Berkshire entity. In response, the lender has labeled the lawsuit as “unfounded.”
According to the CFPB’s announcement on Monday, Vanderbilt Mortgage & Finance’s actions led many families to face difficulties in settling their bills and acquiring essential items. One striking case involved Vanderbilt approving a loan for a family already facing 33 debts in collections, which resulted in them falling behind on payments within just eight months of loan approval.
CFPB Director Rohit Chopra criticized the lender’s practices, stating that Vanderbilt is aware of how it places borrowers into precarious loan situations solely to finalize the sale of a manufactured home.
Vanderbilt is a part of Berkshire’s Clayton Homes, recognized as the largest manufacturer of manufactured homes in the United States, with both companies operating out of Tennessee.
Vanderbilt responded to the allegations by asserting its historical commitment to enhancing homeownership across the country over the past five decades. The firm condemned the CFPB’s lawsuit as unfounded and indicative of politically charged regulatory overreach.
This is not the first instance involving Clayton; a decade ago, the company faced accusations of predatory lending practices, although Buffett defended its operations, arguing that it complied with all applicable federal and state laws.
Following the financial crisis in 2008, which resulted from extensive breakdowns in the mortgage sector, all lending institutions were mandated to verify the financial standing of borrowers and assess their capacity to repay loans genuinely.
The CFPB’s lawsuit contends that Vanderbilt failed to meet these requirements and, at times, altered its lending criteria when borrowers reported inadequate income or submitted unrealistic living expense estimates.
In its defense, Vanderbilt reiterated that it adheres to all relevant lending regulations and examines both borrower income and living costs diligently. The firm argued that the CFPB reviewed a substantial number of loans, with claims that less than 0.8% of those loans were inappropriate according to the agency. Vanderbilt suggested that the lawsuit attempts to establish a new and unclear standard that is not stipulated in existing law.
The company added that far from safeguarding American consumers, the CFPB’s legal action could hinder creditworthy individuals from securing homeownership opportunities.
In addition to its manufactured housing enterprises, Berkshire Hathaway — headquartered in Omaha, Nebraska — possesses a diverse portfolio of companies, which includes numerous manufacturers, major utility firms, prominent insurance providers like Geico, the BNSF railway, and several well-known retail brands such as Dairy Queen and Helzberg Diamonds.
