A top US banking regulator is suing a division of Warren Buffett’s Berkshire Hathaway for allegedly pushing borrowers into home loans they couldn’t afford.
The suit, which seeks monetary damages, is against Vanderbilt Mortgage, which is the in-house lender for Clayton Homes, the Berkshire-owned builder of manufactured homes.
The Consumer Financial Protection Bureau said Vanderbilt used unrealistic living expenses and ignored “obvious red flags” to approve loans. In one instance, the CFPB says Vanderbilt approved a mortgage for a single mother with two dependants, nine debts in collection and a household income of -$0.50. The borrower fell behind within four months.
“Vanderbilt knowingly traps people in risky loans in order to close the deal on selling a manufactured home,” CFPB Director Rohit Chopra said in a statement on Monday.
Vanderbilt said in a statement it was “proud to serve families across the us by making affordable homeownership a reality,” and is in the process of reviewing the CFPB’s suit.
