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Joint Investigation

Warren Buffett and his holdings in the manufactured housing industry have been in the news lately and none of it has been positive.  While congress is trying to roll back some of the tight regulations brought forth from the Dodd-Frank act, house Democrats are calling for a joint investigation from the Department of Justice and the Consumer Financial Protection Bureau.  Whether Democrats are truly targeting Berkshire-Hathaway’s subsidiaries Clayton Homes, Vanderbilt Mortgage, and 21st Mortgage over predatory lending allegations or if Democrats are simply attempting to demonstrate the importance of Dodd-Frank during debates we cannot be certain, however, allegations do exist.

The allegations surrounding Clayton Homes and its lending partners are of discriminatory lending toward low to moderate income minorities. Clayton customers have Reported to The Seattle Times saying they were, “misled into high cost loans they could not repay”.  Legislators are looking for the involvement of the CFPB because predatory lending practices, especially practices involving racial discrimination, would be a violation of the Dodd-Frank Act, the Equal Credit Opportunity Act, and the Fair Housing Act.

Clayton has not had much commentary on this matter but has said that their lending affiliates Vanderbilt Mortgage and 21st Mortgage are strictly monitored by both State and Federal regulators and that they offer lending products to a wider range of credit scores and due to their wider credit score acceptance they service loans for low to moderate income minorities at a higher density than their competitors.  Clayton also stated that for borrows with a credit score lower than 600 the average note rate was the same for both whites and non-whites.

Sam Gilford of the CFPB said allegations of predatory lending are concerning but declined to say if there were plans to open an investigation.

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January 19, 2016 Posted by | General Information | , , , , , , , , , , , , | Leave a comment