A federal regulator sued a mortgage finance agency owned by Warren Buffett’s Berkshire Hathaway conglomerate on Monday, claiming it made loans to patrons of manufactured houses that it knew they might not afford.

The civil swimsuit, filed in federal court within the Japanese District of Tennessee by the Client Monetary Safety Bureau, stated Vanderbilt Mortgage and Finance ignored “clear and apparent” indicators that debtors wouldn’t have the ability to repay the loans.

The patron bureau stated Vanderbilt ignored that some debtors have been already falling behind on debt obligations when the loans have been issued.

“Vanderbilt knowingly traps individuals in dangerous loans in an effort to shut the deal on promoting a manufactured dwelling,” stated Rohit Chopra, the bureau’s director.

The lawsuit seeks to pressure Vanderbilt to vary its practices, present restitution to prospects and pay an unspecified civil penalty.

Vanderbilt is a subsidiary of Clayton Properties, the nation’s largest builder of manufactured houses, typically referred to as cell or prefab homes. Clayton additionally owns twenty first Mortgage, which like Vanderbilt makes a speciality of writing loans to patrons of manufactured houses. All three firms are primarily based in Tennessee.

twenty first Mortgage was not included within the swimsuit. A spokeswoman for the regulator declined to remark.

A consultant for Vanderbilt and Clayton Properties didn’t reply to a request for remark.

Over time, Clayton Properties and its mortgage companies have drawn criticism for sales and lending practices.

Their essential prospects are typically lower-income residents of rural communities. Manufactured housing is usually promoted as a pathway to homeownership for shoppers with restricted means.

However the client bureau stated its research found that such loans usually include higher-than-normal rates of interest, and are tough to refinance when charges decline.

The regulator stated that a lot of Vanderbilt’s debtors weren’t in a position to sustain with the month-to-month funds and have been charged late charges and penalties. In some instances, debtors confronted foreclosures and misplaced their houses.

In saying the lawsuit, the company supplied a link to complaints filed by Vanderbilt prospects.

The bureau has introduced a flurry of enforcement actions within the waning days of the Biden administration. Simply earlier than Christmas, it sued Rocket Mortgage, claiming the agency paid kickbacks to actual property brokers to steer debtors to it. Additionally in December, it sued three big banks, accusing them of fraud for failing to cease scammers from swindling cash from prospects utilizing the money-transfer app Zelle.

Created within the aftermath of the monetary disaster, the bureau has drawn criticism for years from Republicans and the monetary companies business. The Republican-controlled Congress and Trump administration are seemingly to try to rein in the consumer bureau, and the administration may transfer to dismiss a number of the last-minute lawsuits.