Berkshire Hathaway unit accused of overlooking red flags in home loans
- The Consumer Financial Protection Bureau has filed a lawsuit against Vanderbilt Mortgage & Finance for malpractice in lending.
- The lawsuit claims that Vanderbilt's approvals of loans led families to financial distress.
- These actions highlight potential predatory lending practices within Berkshire Hathaway's subsidiary operations.
In a recent lawsuit filed by the Consumer Financial Protection Bureau, a federal agency in the United States, Vanderbilt Mortgage & Finance, a subsidiary of Berkshire Hathaway, is accused of disregarding significant warning signs that indicated many borrowers could not afford the mortgages they were provided for purchasing manufactured homes. This situation raises serious concerns about the lending practices utilized by companies under the Berkshire Hathaway umbrella, particularly in the manufactured housing sector. The CFPB highlighted a case where Vanderbilt approved a loan for a family that had 33 debts already in collection. This led to the family falling behind on payments within eight months of receiving the loan. The CFPB's Director, Rohit Chopra, emphasized that Vanderbilt knowingly entraps borrowers in precarious financial situations to finalize deals on manufactured home sales. This lawsuit comes at a time when Clayton Homes, the parent company of Vanderbilt, has faced scrutiny for its lending practices in the past, reflecting an ongoing pattern of behavior that has resulted in financial distress for numerous families. Vanderbilt and Clayton are based in Tennessee and have faced allegations of manipulative lending standards in their operations. The CFPB's claims indicate that Vanderbilt frequently adjusted its lending criteria to qualify borrowers who lacked sufficient income or who relied on unrealistic projections of their living expenses. This lawsuit is particularly significant within the context of America's ongoing housing crisis, as it sheds light on the predatory nature of some lending practices that exacerbate the financial struggles of low-income families seeking affordable housing options.