CFPB Sues Berkshire Over Unpaid Home Loans Linked to Vanderbilt
The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Vanderbilt Mortgage & Finance, a non-bank financing company based in Tennessee. The company, a subsidiary of Clayton Homes, Inc. and owned by Berkshire Hathaway, Inc., is accused of pushing families towards unaffordable loans for the purchase of manufactured homes.
According to the CFPB, Vanderbilt's business model ignores clear signs that borrowers are unable to repay their loans. This has led many families to struggle with making payments and meeting basic living needs. The company also imposed additional fees and penalties when loans became overdue, causing some borrowers to ultimately lose their homes.
CFPB Director Rohit Chopra stated, "Vanderbilt is knowingly trapping people in risky loans to complete the sale of manufactured homes." The lawsuit aims to halt Vanderbilt's alleged illegal practices and provide assistance to affected homeowners.
Manufactured homes, also known as mobile homes, are a significant source of affordable housing for millions of low-income and elderly Americans, especially in rural areas. However, CFPB research indicates that loans for these homes carry higher interest rates and limited refinancing opportunities compared to traditional mortgage loans.
The lawsuit claims that Vanderbilt failed to make reasonable, good-faith assessments of borrowers' ability to repay loans as legally required. This includes allegations of manipulating lending standards when borrowers lacked adequate income, fabricating unrealistic living expense estimates, and extending loans to borrowers they anticipated would be unable to repay.
The CFPB asserts that Vanderbilt has led families to failure by extending credit to borrowers who do not have sufficient income or assets to make loan payments, in violation of the Truth in Lending Act and Regulation Z.
Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions that violate consumer financial laws. The lawsuit aims to stop the company's alleged illegal conduct, provide restitution to harmed consumers, and impose a monetary penalty payable to the CFPB's victims' relief fund.