CFPB Says Vanderbilt Mortgage Mislead Manufactured Home Borrowers

The Consumer Financial Protection Bureau has accused Vanderbilt Mortgage & Finance of misleading borrowers looking to finance manufactured homes.

In a new lawsuit, the CFPB claims Vanderbilt ignored obvious signs that borrowers could not afford loans, resulting in excessive financial struggle for families struggling to make payments.

Vanderbilt allegedly charged fees and penalties on delinquent loans, leading to some borrowers losing their homes.

“Vanderbilt knowingly traps people in risky loans in order to close the deal on selling a manufactured home,” said CFPB Director Rohit Chopra. “The CFPB’s lawsuit seeks to not only protect homebuyers, but also honest lenders helping people to finance the purchase of an affordable home.”

Lenders are required to make good-faith assessments of borrower’s ability to repay loans. The lawsuit claims that Vanderbilt failed to do so, and in fact manipulated lending standards when borrowers did not make sufficient income and gave unrealistic estimates of living expenses.

In some instances, Vanderbilt allegedly made loans to borrowers who did not have enough income to cover the mortgage and basic living expenses even under the company’s own policies.

The CFPB noted that manufactured home loans often come with higher interest rates and limited opportunity to refinance compared to traditional home mortgages.

Maryville, TN-based Vanderbilt is a subsidiary of Clayton Homes, the largest manufactured home builder in the U.S. Berkshire Hathaway owns Clayton.

Clayton came under fire in 2015 when it allegedly drove Black, Hispanic, and Native American borrowers into subprime loans they could not afford. Warren Buffett, Berkshire Hathaway’s chairman and CEO, defended the company at the time.