In one instance, the company allegedly provided a loan to a household that had 33 debts in collection.
A mortgage lender owned by Warren Buffet’s holding company, Berkshire Hathaway, has been sued by the Consumer Financial Protection Bureau (CFPB), alleging that the business pushed people into taking unaffordable loans.
The Jan. 6 lawsuit was filed against Tennessee-based Vanderbilt Mortgage and Finance in the U.S. District Court for the Eastern District of Tennessee. The company provides loans for manufactured homes, also known as mobile homes.
“Vanderbilt’s business model ignored clear and obvious red flags that the borrowers could not afford the loans,” the agency said in a statement. “As a result, many families found themselves struggling to make payments and meet basic life necessities.
“Vanderbilt charged many borrowers additional fees and penalties when their loans became delinquent, and some eventually lost their homes.”
Vanderbilt is a subsidiary of Clayton Homes, the largest builder of manufactured homes in the United States. Clayton is, in turn, a wholly owned subsidiary of Berkshire Hathaway Inc. Most homes financed by Vanderbilt are manufactured and sold by affiliated companies owned by Clayton.
According to the agency, mobile homes are a “vital source of affordable housing,” especially for millions of low-income and older U.S. citizens. In July, the average sales price of a single-section manufactured home was $88,800, data from the U.S. Census Bureau show. In contrast, the median sales price of houses sold in the second quarter of 2024 was $414,500.
In the complaint, the CFPB alleged that Vanderbilt “manipulated lending standards” when borrowers did not have enough income.
“Vanderbilt often disregarded evidence that borrowers did not have sufficient income or assets (other than the value of their home) to pay their mortgage and cover recurring obligations and basic living expenses, like food and health care,” the statement said.
“Sometimes, Vanderbilt originated loans for borrowers who were already struggling, making their financial situation worse.”
For instance, in one incident, the company allegedly approved a loan for a household with 33 debts in collection. Just eight months after getting the mortgage, the family fell behind in payments, court documents state.
