The U.S. Consumer Financial Protection Bureau (CFPB) has voluntarily dismissed its lawsuit against Vanderbilt Mortgage and Finance, a subsidiary of Berkshire Hathaway. The lawsuit alleged that Vanderbilt steered borrowers into unaffordable loans for homes purchased from Clayton Homes, another Berkshire Hathaway company. This dismissal signals a broader shift in the CFPB’s enforcement approach under the current administration.
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CFPB Enforcement Shift
The dismissal, which occurred on Thursday, prevents the CFPB from refiling the case against Vanderbilt. It coincides with the dismissal of several other lawsuits, including one against Capital One, indicating a significant reduction in the agency’s enforcement activities. Established in 2010, the CFPB has faced scrutiny and calls for reform under the current presidential administration.
Original Allegations Against Vanderbilt
The January 6th lawsuit accused Vanderbilt of violating the Truth in Lending Act by disregarding warning signs that borrowers could not manage their loan repayments. The CFPB contended that this practice resulted in borrowers facing late fees, penalties, home repossessions, and bankruptcies. The lawsuit focused on loans associated with homes purchased from Clayton Homes, the largest manufacturer of manufactured and mobile homes in the United States.
Clayton Homes and the Manufactured Housing Market
Clayton Homes primarily serves customers with lower credit scores, lower incomes, or those residing in rural areas where access to traditional housing may be limited. These customers often rely on financing options provided by companies like Vanderbilt. The connection between Vanderbilt and Clayton, both owned by Berkshire Hathaway, was central to the CFPB’s initial complaint.
Clayton’s Financial Performance
In 2024, Clayton reported an increase in revenue, exceeding $12.4 billion, representing more than 8% growth. However, pretax profit declined by 6% to approximately $1.9 billion. This decrease was partly attributed to higher losses from loans and homeowner property insurance claims. The CFPB’s dismissed lawsuit could have impacted Clayton’s financial standing if it had proceeded.
Conclusion
The CFPB’s decision to dismiss the lawsuit against Vanderbilt Mortgage raises questions about the future direction of consumer financial protection enforcement. While the specific reasons for the dismissal remain undisclosed, it reflects a broader trend of reduced regulatory activity. The implications for borrowers and the manufactured housing market remain to be seen.
