U.S. lawmakers called for federal investigations into Clayton Homes, the mobile-home business at Warren Buffett’s Berkshire Hathaway Inc., after the Seattle Times and BuzzFeed News wrote that the company targeted minority borrowers and charged them higher interest rates on average than whites.
Representative Maxine Waters, the top Democrat on the House Financial Services Committee, joined three colleagues -- Democratic congressmen Keith Ellison, Emanuel Cleaver and Michael Capuano -- in calling for the Department of Justice and Consumer Financial Protection Bureau to look into the company.
“The practices detailed in the Seattle Times and BuzzFeed News investigation present a disturbing business model that targets low- and moderate-income minority borrowers,” they wrote in a letter addressed to Attorney General Loretta Lynch and CFPB Director Richard Cordray. “The allegations raised in the news report are squarely within the agencies’ authority to investigate and pursue appropriate corrective action.”
Audrey Saunders, a spokeswoman for Clayton Homes, didn’t immediately respond to a request for comment on the letter outside normal business hours. The company has previously disputed the publications’ findings. Buffett also didn’t immediately respond to a request for comment sent to an assistant.
The Seattle Times and BuzzFeed reported the lawmakers’ letter Tuesday. For their Dec. 26 article, the publications crunched federal data to show a racial disparity in lending rates and documented sales practices that focused on minority communities. The news organizations also related incidents in which slurs were allegedly used in reference to employees and customers.
Published Allegations
It was the latest in a series of articles about Clayton, which has expanded under Berkshire’s ownership and is now the largest builder of mobile homes in the U.S. An earlier story accused the company of engaging in deceptive sales practices, trapping borrowers in residences that are difficult to resell. Customers said collection agents working for the manufacturer told them to cut back on food and medical care to make house payments, according to that report.
Clayton has called the news accounts misleading. In a statement after the Dec. 26 article was published, the company said race and ethnicity don’t factor into how it prices loans, that it doesn’t target minority communities and that it doesn’t tolerate discrimination against employees.
Wider Range
The manufacturer also said that it offers mortgages to borrowers with a wider range of credit scores than do competitors, which could result in a disproportionate share of its loans being made to minority borrowers. The company had previously said that most customers are satisfied with their homes and mortgages.