The CFPB says Warren Buffett’s Berkshire Hathaway unit ignored red flags in manufactured home loans

OMAHA, Neb. (AP) — The federal Consumer Financial Protection Bureau says in a lawsuit that a unit of Warren Buffett Berkshire Hathaway ignored “clear and obvious red flags” that borrowers could not afford the mortgages they were given to buy manufactured homes from another Berkshire affiliate.

CFPB He said on Monday Vanderbilt Mortgage and Finance’s decisions have put many families in a position where they struggle to pay their bills and purchase basic necessities. In one example, Vanderbilt approved a loan for a family that already had 33 debts in collection, and as a result, the family began falling behind just eight months after the loan was approved.

“Vanderbilt intentionally traps people into risky loans in order to close a manufactured home sale,” CFPB Director Rohit Chopra said in a statement.

Vanderbilt is a unit of Berkshire Clayton Homes, the nation’s largest builder of manufactured homes. A Vanderbilt spokesman said the company was reviewing the CFPB lawsuit on Monday but did not immediately comment. Clayton also did not immediately respond. Both Vanderbilt and Clayton are based in Tennessee.

A decade ago, so was Clayton accused Of predatory lending in a series of news articles, however Buffett defended Clayton’s lending practices The company follows all state and federal laws, he said.

After the 2008 financial crisis, which was triggered by systemic failures in the mortgage market, all lenders were required to verify borrowers’ income and make a good faith decision about whether they would be able to repay the loan.

The CFPB said in the lawsuit that Vanderbilt failed to do so and sometimes fudged its lending standards when borrowers did not have sufficient income or relied on unrealistic estimates of living expenses.

In addition to manufactured housing companies Berkshireheadquartered in Omaha, Nebraska, owns a wide range of companies, including other manufacturers, several major utilities, huge insurance companies such as Geico, BNSF Railway and some of its most popular retail brands including Dairy Queen and Helzberg Diamonds.