Vanderbilt – a subsidiary of Warren Buffett’s Berkshire Hathaway – is said to have deliberately deceived borrowers and pressured them into loans that were unaffordable for them. Now the US government has filed a lawsuit. However, Berkshire Hathaway investors are unconcerned.
• US government sues Berkshire Hathaway subsidiary Vanderbilt
• Allegation: Borrowers were pressured into loans that were too expensive
• Berkshire Hathaway shares unimpressed
A setback for Warren Buffett and his empire: Vanderbilt Mortgage & Finance, a subsidiary of Berkshire Hathaway subsidiary Clayton Homes, is being sued by the US government. The accusation: The company is said to have pressured borrowers into loans that were unaffordable for them, as Reuters reports. Customers would then use these loans to purchase homes from Clayton Homes’ prefabricated home business. The US Consumer Financial Protection Bureau (CFPB) criticizes that “clear and obvious warning signals” were ignored.
Fines, seizure & bankruptcy
The consequences: Borrowers defaulted on their payments, late fees and penalties arose, some houses were even repossessed or the borrowers had to file for bankruptcy, the CFPB said. “Vanderbilt knowingly lures people into risky loans to complete the sale of a manufactured home,” said CFPB Director Rohit Chopra. And further: “The CFPB’s lawsuit is intended to protect not only home buyers, but also honest lenders who help people finance the purchase of an affordable home.” The CFPB is now demanding that Vanderbilt pay civil penalties and restitution for harmed borrowers.
Berkshire Hathaway unimpressed
Investors in Berkshire Hathaway shares have not been disturbed by the lawsuit so far. In premarket trading on the NYSE, B shares temporarily rose 0.19 percent to $452.27.
Editorial team finanzen.net
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