Vanderbilt Mortgage & Finance Inc., a lending subsidiary of Warren Buffett’s Berkshire Hathaway Inc., is facing a lawsuit over allegations that it issued home mortgages classified as “unaffordable.” The Consumer Financial Protection Bureau (CFPB) has taken the case to the U.S. District Court for the Eastern District of Tennessee, claiming the company ignored clear financial signs indicating that many borrowers simply didn’t have enough income or assets to handle their mortgage payments.
Allegations Against Vanderbilt Mortgage
According to the CFPB, Vanderbilt’s practices entrap borrowers in risky loan agreements, driven primarily by a desire to promote sales of manufactured homes.
The CFPB Director stated that the lawsuit’s primary goal is to protect homebuyers and to uphold the interests of legitimate lenders who are dedicated to providing affordable housing solutions.
Vanderbilt Mortgage operates under Clayton Homes Inc., a residential construction firm that was founded in Tennessee in 1956 and became part of Berkshire Hathaway in 2003.
Response from Vanderbilt Mortgage
In light of these allegations, Vanderbilt has vehemently denied any wrongdoing.
The company labeled the claims as baseless, suggesting they stem from excessive regulation with political motives.
They emphasized their commitment to compliance with existing laws and pointed out that, in the past, the CFPB had approved their underwriting practices.
Vanderbilt voiced concerns over what they see as unexpected pressures to comply with new, vague standards that aren’t clearly defined in current regulations.
The CFPB’s complaint reveals that Vanderbilt’s lending practices relied on unrealistic assumptions about borrowers’ financial situations after they took on mortgage payments.
This misjudgment left many clients struggling with essential living expenses, like food and healthcare.
As a result, numerous borrowers encountered rising fees, defaulted on their loans, and even lost their homes.
Previous Scrutiny of Vanderbilt
This isn’t the first time Vanderbilt has come under scrutiny; back in 2016, some congressional members called for investigations when reports emerged suggesting that minority borrowers faced higher interest rates than their White counterparts.
Source: Claimsjournal