Wealthy liberal Warren Buffett’s Predatory Lender Charges Minorities A Lot More

Wealthy liberal Warren Buffett’s Predatory Lender Charges Minorities A Lot More

Warren Buffett might seem like a genial older man, grandfatherly and kind. The way that the made his billions (66.7 billion, precisely) might chill you. This is the reality of the man portrayed VS the man in reality. This is the darker side of Buffet:

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After a few years living with her sister, Rose Mary Zunie, 59, was ready to move into a place of her own.

So, on an arid Saturday morning this past summer, the sisters piled into a friend’s pickup truck and headed for a Clayton Homes sales lot here just outside the impoverished Navajo reservation.

The women — one in a long, colorful tribal skirt, another wearing turquoise jewelry, a traditional talisman against evil — were steered to a mobile home sales agent who spoke Navajo, just like the voice on the store’s radio ads.
He walked them through Clayton-built homes on the lot, then into the sales center, passing a banner and posters promoting one subprime lender: Vanderbilt Mortgage, a Clayton subsidiary. Inside, he handed them a Vanderbilt sales pamphlet.

“Vanderbilt is the only one that finances on the reservation,” he told the women.

His claim, which the women caught on tape, was a lie. And it was illegal.

It is just one in a pattern of deceptions that Clayton has used to help extract billions from poor customers around the country — particularly people of color, who make up a substantial and growing portion of its business.

The company is controlled by Warren Buffett, one of world’s richest men, but its methods hardly match Buffett’s honest, folksy image: Clayton systematically pursues unwitting minority home buyers and baits them into costly subprime loans, many of which are doomed to fail, an investigation by BuzzFeed News and the Seattle Times has found.

Clayton’s predatory practices have damaged minority communities — from rural black enclaves in the Louisiana Delta, across Spanish-speaking swaths of Texas, to Native American reservations in the Southwest. Many customers end up losing their homes, thousands of dollars in down payments, or even land they’d owned outright.

Over the 12 years since Buffett’s Berkshire Hathaway bought Clayton Homes, the company has grown to dominate virtually every aspect of America’s mobile-home industry. It builds nearly half the new manufactured homes sold in this country every year, making it the most prolific U.S. home builder of any type. It sells them through a network of more than 1,600 dealerships. And it finances more mobile-home loans than any other lender by a factor of more than seven.

In minority communities, Clayton’s grip on the lending market verges on monopolistic: Last year, according to federal data, Clayton made 72% of the loans to black people who financed mobile homes.

The company’s in-house lender, Vanderbilt Mortgage, charges minority borrowers substantially higher rates, on average, than their white counterparts. In fact, federal data shows that Vanderbilt typically charges black people who make over $75,000 a year slightly more than white people who make only $35,000.

Through a spokesperson earlier this month, Buffett declined to discuss racial issues at Clayton Homes, and a reporter who attempted to contact him at his home was turned away by security.

Clayton and Berkshire Hathaway did not respond to numerous requests for interviews with executives, delivered by phone and email, as well as in person at Berkshire Hathaway’s headquarters in Omaha. The companies did not answer any of 34 detailed questions about Clayton and its practices. Nor did they respond to an extensive summary of this article’s findings, provided along with an invitation to comment.

On its website, Clayton says that it seeks to “treat people right” and “preserve our integrity above all else.”

(After publication of this article, Clayton issued a press release, accusing the reporters of “activism masquerading as journalism” and stating: “We categorically and adamantly deny discriminating against customers or team members based on race or ethnicity.” For two specific categories of loans, the company said, minorities pay the same or slightly lower interest rates than whites.)

Clayton has expanded its minority customer base — 31% of its loans went to minorities last year, up from 22% in 2008 — with the help of meticulous demographic analysis and targeted sales promotions. Spanish-language ads in Texas promise Latino immigrants without Social Security numbers that they, too, can enjoy the American dream of home ownership.

As it drew in more Latino customers, however, Clayton’s practice was not to provide Spanish-speaking customers with translated loan documents or interpreters at closing — even after employees at headquarters complained that too many customers were being misled about loan terms.

Clayton systematically pursues unwitting minority home buyers and baits them into costly subprime loans, many of which are doomed to fail.

Fair housing laws prohibit lenders from targeting and overcharging people of color, whose communities historically were denied access to credit.

Clayton’s practices are part of a corporate culture that has condoned racism, including black employees fired while white workers used discriminatory slurs and kept their jobs, and phone collectors casually insulting borrowers with racist stereotypes.

For an earlier story detailing Clayton’s widespread abuse of borrowers, a Clayton spokesperson said that the company helps customers find homes within their budgets and has a “purpose of opening doors to a better life, one home at a time.” Buffett later defended the company, telling Berkshire Hathaway shareholders he makes “no apologies whatsoever about Clayton’s lending terms.”

For this story, BuzzFeed News and the Seattle Times analyzed hundreds of internal company documents, thousands of legal and regulatory filings, more than 40 hours of internal company audio recordings, and federal data on hundreds of thousands of mobile-home loans over a decade. Reporters conducted interviews with more than 280 customers, employees, and experts, including some Clayton insiders who said they were appalled by the company’s practices.

Not quite the Mr. Rogers he would have everyone believing he was, now is he?

Written by Katie McGuire. Send your hate mail to the author at [email protected], or feel free to mean tweet me at @GOPKatie, where I will be sure to do very little about it.

McGuire

Writer, Blogger. Political aficionado. Addicted to all levels of government campaigns.

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