Part of Warren Buffett’s empire just got sued by the US government

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The US government has sued a unit of Warren Buffett’s Berkshire Hathaway, accusing it of pushing borrowers into unaffordable loans—so customers would buy homes from the company’s manufactured housing business.

The U.S. Consumer Financial Protection Bureau filed the lawsuit Monday against Berkshire’s Clayton Homes manufactured housing division. The complaint alleges that Vanderbilt Mortgage and Finance, a unit of Clayton, ignored “clear and obvious red flags” that borrowers could not afford their loans.

Many borrowers incurred late fees and penalties when they fell behind on payments, and had their homes repossessed or filed for bankruptcy after their loans went into default, the CFPB said.

Vanderbilt unreasonably underestimated borrowers’ ability to pay other debts and keep food on the table, the agency alleged. In one instance, Vanderbilt allegedly approved a home loan for a couple with three children that left them with $57.78 a month for discretionary spending after paying expenses—and the couple eventually defaulted, says the complaint.

“Vanderbilt knowingly traps people in risky loans in order to close the deal on selling a manufactured home,” CFPB Director Rohit Chopra said in a statement.

A spokeswoman for Vanderbilt and Clayton had no immediate comment.

The CFPB accused Vanderbilt of violating the federal Truth in Lending Act, and it is seeking civil fines and restitution for harmed borrowers. The agency filed its complaint in the Knoxville, Tennessee, federal court, nearby the company’s Maryville headquarters.

Clayton is the largest U.S. builder of manufactured homes, including mobile homes, which are often bought by people who have low credit scores and incomes or live in rural areas.

Clayton was the subject of reports in The Seattle Times in 2015 alleging it drove Black, Hispanic and Native American borrowers into subprime loans they could not afford.

It has been part of Omaha, Nebraska-based Berkshire since 2003, and the business had revenue of $9.1 billion in the first nine months of 2024.