The Consumer Financial Protection Bureau (CFPB) has been busy in recent weeks.
At the end of 2024, the consumer watchdog agency accused Rocket Companies Inc. of allegedly paying brokers to direct clients to the company’s mortgage business. Now, they are suing Vanderbilt Mortgage & Finance for allegedly setting families up to fail when they borrowed money to buy a manufactured home. The agency is seeking to stop Vanderbilt’s “illegal practices” and to obtain relief for the harmed homeowners.
According to the CFPB, the national housing lender ignored “clear and obvious red flags” that borrowers could not afford the loans they were given, resulting in families struggling to make payments and meet basic life necessities. Vanderbilt also is accused of charging many borrowers additional fees and penalties when the loans became delinquent. Some families eventually lost 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.”
The Maryville, Tennessee-based nonbank financing company is part of Clayton Homes Inc., the nation’s largest builder of manufactured homes and a subsidiary of Berkshire Hathaway. The lender originates mortgages for the purchase of manufactured homes that are built and sold by Vanderbilt-affiliated companies, according to the CFPB’s lawsuit.
Vanderbilt has maintained its innocence, saying the lawsuit is unfounded and untrue and is an example of regulatory overreach.
The CFPB accuses Vanderbilt of manipulating lending standards when borrowers did not make sufficient income. The lender allegedly “disregarded evidence” that borrowers did not have sufficient income or assets to pay their mortgage and cover obligations.
The lender created artificially low estimates of living expenses that made no adjustment for higher expenses in different geographic areas. Vanderbilt then made loans to borrowers who, even with the company’s overly optimistic estimates, did not have enough income to cover the mortgage and living expenses.
