Trump CFPB drops suit against Warren Buffett's mobile-home lender that "knowingly traps people"

The lawsuit read like a fable of American capitalism. It accused the nation’s biggest mobile-home builder — owned by one of the world's wealthiest men and servicing the most financially vulnerable homeowners — of giving loans to borrowers who clearly wouldn't be able to make the payments. 

Filed by the Consumer Financial Protection Bureau, the federal watchdog agency created after the Great Recession to prevent these types of practices, the suit took aim at Vanderbilt Mortgage and Finance, a Tennessee-based lender owned by Clayton Homes, part of billionaire Warren Buffett's empire. 

In one instance, the suit alleged that a disabled Army veteran making $700 a month was approved for a loan with a $673 minimum payment. Within a year and a half, she’d fallen behind and Vanderbilt was trying to foreclose on both her home and the family-owned land she used to secure the mortgage, the suit said. In another instance, a family with two children and 33 outstanding debts was approved for a mortgage; within eight months, they’d fallen behind on payments, the suit said.

“Vanderbilt knowingly traps people in risky loans in order to close the deal on selling a manufactured home,” Rohit Chopra, director of the CFPB under the Biden administration, said in a Jan. 6 statement. The agency formally dropped the suit on Feb. 28, weeks after the Trump administration fired Chopra and named Russell Vought acting director until Jonathan McKernan is confirmed.

Vanderbilt said the suit "is unfounded and untrue, and is the latest example of politically motivated, regulatory overreach." The company said it complies with lending regulations that require it to consider borrowers' incomes and living expenses. The "risky loans" represent 0.8% of 70,000 loans reviewed by the CFPB, according to Vanderbilt. The company told Salon it loses an average of 23% of a loan’s value if the borrower defaults, which in 2024 represented $21.9 million in losses. 

“Vanderbilt Mortgage does not want anyone to buy a home they cannot afford — when a loan defaults, Vanderbilt incurs significant financial losses,” the company's statement said. 

The CFPB — one of the first agencies to be targeted in Trump's federal government purge —remains alive, but just barely, The New York Times reports. Vought, an author of Project 2025 who serves as White House budget director, initially shuttered the agency's D.C. headquarters, froze work at the bureau and fired dozens of employees before a judge ordered them temporarily rehired. 

Without CFPB oversight, mobile-home owners — representing roughly 22 million people in rural areas across the South and West who earn less than $40,000 per year — are left with few institutional watchdogs advocating for their interests, Esther Sullivan, a nonresident fellow at the Urban Institute, told Salon. 

The CFPB is "doing so much of the work not only to protect owners and residents of manufactured housing, but also to understand the nature of the marketplace, which I think in many respects has been kind of a black box,” Sullivan said. 

Oversight of the homes' construction, and ensuring it complies with federal building standards, falls under the purview of the U.S. Department of Housing and Urban Development. But outside of the CFPB, no agency is tasked with monitoring the industry specifically for violations against consumers. 

”Even though HUD regulates manufactured housing … in terms of actually, like, not just regulating, but overseeing the industry and understanding it and collecting data and making it public ... the CFPB has been the major player,” Sullivan said. 

Affordable housing, limited lending regulations

Mobile homes, which cost around half as much to build compared to a site-built home, represent a vital source of affordable housing. The CFPB has called manufactured housing “the largest source of unsubsidized affordable housing in the country.”

“Manufactured housing is a primary way that the lowest-income Americans break into homeownership, because it's just so affordable,” Sullivan told Salon. In 2023, the average sale price of a new mobile home was around $124,300, compared to $409,872 for a newly built single-family home. 

The average mobile-home owner’s annual income is roughly $38,000 — less than half the median income for single-family homeowners, which is around $79,800, according to the Urban Institute. In a 2022 survey of mobile-home owners published by the CFPB, one in four reported not having enough food to eat and not being able to afford more food, compared with one in 10 single-family homeowners reporting the same experience.

“We have to understand that manufactured homeowners are, really, our nation's lowest-income homeowners,” Sullivan said. 

But mobile-home lending is a uniquely regulated industry, mostly because mobile homes aren’t legally classified as “homes.” In most states, mobile homes are automatically titled as personal property, rather than personal real estate — a historical hangover from many decades ago, when manufactured homes were mostly used to house temporary workers.

Legally speaking, this makes owning a mobile home more akin to owning a motorcycle or sailboat than a single-family home. Unless it’s titled as real estate and secured with a mortgage loan, mobile homes can be repossessed by the lender even if the borrower is barely behind on payments. An estimated 70% of America’s mobile homes aren’t titled as a house, Sullivan said. This is despite the fact that just as many mobile homes — around 70% — are used as the owner’s sole residence. 

“The home can be repossessed if the person falls behind, and that's usually a quicker process than in default and foreclosure,” Rachel Siegel, a senior officer with Pew Charitable Trusts’ housing policy initiative, told Salon.

It’s technically possible to get a manufactured house re-titled as a home, but the process can be time-consuming and expensive, and most states require that the borrower also owns the land the mobile home occupies, ruling out many residents of trailer or RV parks.  

As such, most mobile homes don’t qualify for traditional mortgage loans. Around 43% of mobile homes are secured with personal property loans, or “chattel” loans, in which the only collateral used against the loan is the asset itself. In 2019, when Vanderbilt was servicing roughly 12,600 mobile home loans, an estimated 9,000 were chattel loans, according to a comprehensive report on the mobile-home lending industry published by the CFPB in 2021. 

“There’s very little regulation in this space compared to a mortgage,” Sullivan said. “What that means is that they get riskier, more expensive loans, with higher interest rates, higher financial costs, fewer protections — and oftentimes the asset can be repossessed like a car.”

Mobile-home owners can’t even call themselves homeowners until their last loan payment; borrowers don’t legally own the home until the final payment clears. 

“That titling process is, really, the gatekeeper to access to mortgages,” Siegel told Salon. Mortgage loans typically offer lower interest rates than chattel loans — around 6%, versus as much as 10% or 15% for personal property loans — and offer the borrower longer repayment terms. “Because of those two things, they’re more affordable for the same dollar amount,” Siegel said.

Industry crash leads to Buffett takeover

Mobile-home borrowers’ losses aren’t likely to trigger the stock market collapse that captured the attention and resources of the federal government in 2008. Wall Street banks aren’t holding the loans for America’s lowest-income homeowners.

Instead, the lending market is mostly privately financed and dominated by a handful of companies in and outside of Buffett’s empire. Around 75% of mobile-home chattel loans come from the industry’s five biggest lenders, according to the 2021 report from the CFPB.

We also know that such a crash wouldn’t reverberate through Wall Street, in part because such a crash has already happened. Throughout the ‘70s, ‘80s and ‘90s, an average of 240,000 mobile homes were sold in the U.S. But that figure plummeted in the late ‘90s — the result of “overproduction and loosened financing standards,” according to the Urban Institute, resulting in “credit being extended to borrowers who could not afford the units.”  

By 1999, foreclosures and repossessions were skyrocketing, and used mobile homes — ones whose owners, in most cases, had lost their only home — “flooded the market, reducing demand for new units.” Lenders tightened their purse strings, and new housing production plummeted. Between 2000 and 2005, around 170,000 mobile homes were sold each year.

So when Buffett, head of Berkshire Hathaway, bought Clayton Homes for $1.7 billion in 2003, manufactured housing loans “had been defaulting at alarming rates, and investors had grown wary of them,” according to an investigation by The Center for Public Integrity. The founder’s son, Kevin Clayton, called Buffett that year in search of “a new source of cash” to issue new loans to mobile-home buyers — and knew that "Berkshire Hathaway, with its perfect bond rating, could provide it as cheaply as anyone," according to the investigation.

In the decades since, Buffett has poured billions of dollars into making Clayton Homes the dominant manufacturer and lender of mobile homes in America, scooping up competitors, failing loans and factories, the investigation found. It described Clayton Homes as “a many-headed hydra” that builds almost half of the nation’s mobile homes, then sells those homes through its retailers. It also sells financing through Vanderbilt and several other companies. 

In 2013, Clayton Homes issued 39% of new mobile home loans in the U.S., The Center for Public Integrity found. The second-biggest lender, Wells Fargo, issued 6%.