More On Warren Buffet-Linked Outfit Accused Of Pursuing, Then Baiting Unwitting Poor Homebuyers Into Costly Subprime Loans Through Mobile Home 'Traps'

From an investigative report by The Seattle Times and BuzzFeed News on the alleged pattern of deceptions employed by the Warren Buffett-controlled, mobile home peddler Clayton Homes and its in-house lender, Vanderbilt Mortgage, to allegedly fleece billions from poor customers around the country — particularly people of color:

• The company is controlled by Warren Buffett, one of world’s richest men, but its methods hardly match Buffett’s honest, folksy image: Clayton systematically pursues unwitting minority home buyers and baits them into costly subprime loans, many of which are doomed to fail, an investigation by BuzzFeed News and the Seattle Times has found.
  
  Clayton’s predatory practices have damaged minority communities — from rural black enclaves in the Louisiana Delta, across Spanish-speaking swaths of Texas, to Native American reservations in the Southwest. Many customers end up losing their homes, thousands of dollars in down payments, or even land they’d owned outright.
  
  Over the 12 years since Buffett’s Berkshire Hathaway bought Clayton Homes, the company has grown to dominate virtually every aspect of America’s mobile-home industry. It builds nearly half the new manufactured homes sold in this country every year, making it the most prolific U.S. home builder of any type. It sells them through a network of more than 1,600 dealerships. And it finances more mobile-home loans than any other lender by a factor of more than seven.
  
  In minority communities, Clayton’s grip on the lending market verges on monopolistic: Last year, according to federal data, Clayton made 72% of the loans to black people who financed mobile homes.
  
  The company’s in-house lender, Vanderbilt Mortgage, charges minority borrowers substantially higher rates, on average, than their white counterparts. In fact, federal data shows that Vanderbilt typically charges black people who make over $75,000 a year slightly more than white people who make only $35,000.
  
  Through a spokesperson earlier [last] month, Buffett declined to discuss racial issues at Clayton Homes, and a reporter who attempted to contact him at his home was turned away by security.
  
  Clayton and Berkshire Hathaway did not respond to numerous requests for interviews with executives, delivered by phone and email, as well as in person at Berkshire Hathaway’s headquarters in Omaha. The companies did not answer any of 34 detailed questions about Clayton and its practices. Nor did they respond to an extensive summary of this article’s findings, provided along with an invitation to comment.
  
  On its website, Clayton says that it seeks to “treat people right” and “preserve our integrity above all else.”
  
  (After publication of this article, Clayton issued a press release, accusing the reporters of “activism masquerading as journalism” and stating: “We categorically and adamantly deny discriminating against customers or team members based on race or ethnicity.” For two specific categories of loans, the company said, minorities pay the same or slightly lower interest rates than whites.)(1)
  
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  Clayton’s practices are part of a corporate culture that has condoned racism, including black employees fired while white workers used discriminatory slurs and kept their jobs, and phone collectors casually insulting borrowers with racist stereotypes.
  
  For an earlier story detailing Clayton’s widespread abuse of borrowers, a Clayton spokesperson said that the company helps customers find homes within their budgets and has a “purpose of opening doors to a better life, one home at a time.”(2) Buffett later defended the company, telling Berkshire Hathaway shareholders he makes “no apologies whatsoever about Clayton’s lending terms.”
  
  For this story, BuzzFeed News and the Seattle Times analyzed hundreds of internal company documents, thousands of legal and regulatory filings, more than 40 hours of internal company audio recordings, and federal data on hundreds of thousands of mobile-home loans over a decade. Reporters conducted interviews with more than 280 customers, employees, and experts, including some Clayton insiders who said they were appalled by the company’s practices.
  
  Meanwhile, in the first nine months of this year, Clayton generated more than half a billion dollars in profit, up 28% from the same period last year.
  
  “It’s a perpetual system of people who are never able to get themselves out of the hole,” said Gwen Schablik, who worked as a collector and handled borrowers’ bankruptcies at Clayton’s Maryville, Tennessee, headquarters from 2011 until she quit in 2014.
  
  “I felt, ethically, I couldn’t continue working there,” she said.

For more, see Warren Buffett's Company Wants To Sell You A Mobile Home (Note To Minority Buyers: You Pay Extra).

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(1) See Reporting Mischaracterizes Clayton Homes’ Treatment of Customers and Employees (Company Serves Underserved Markets, Making Homeownership Affordable).

(2) See Warren Buffett's mobile home empire preys on the poor (Billionaire profits at every step, from building to selling to high cost lending).