The Consumer Finance Protection Bureau (CFPB) today filed a lawsuit against Vanderbilt Mortgage & Finance, a Tennessee-based multi-channel nonbank lender that originates loans for manufactured homes across the U.S.
The consumer watchdog alleges that Vanderbilt violated the Truth in Lending Act (TILA) and Regulation Z by failing to make reasonable, good-faith determinations of borrowers’ ability to repay loans. According to Modex, the company originated just under $2 billion in 2023, and just over $2 billion in 2024.
Vanderbilt is a lending unit of Clayton Homes, Inc., the largest manufactured home builder in the U.S., and a wholly owned subsidiary of Berkshire Hathaway, Inc. Vanderbilt originates mortgages for the purchase of manufactured homes that are built and sold by Vanderbilt-affiliated companies. Vanderbilt also does business as Silverton Mortgage.
Manufactured homes and mobile homes are considered a vital source of affordable housing for millions of low-income Americans and for older Americans who live in rural areas.
The CFPB claims that despite “clear and obvious red flags” that borrowers could not repay their loans, Vanderbilt continued to originate risky mortgages and, as a result, many of those families are struggling to make payments and meet basic life necessities. The CFPB’s Consumer Complaint Database shows that consumers filed 221 complaints (with narratives) about Vanderbilt between December 2011 and December 2024.
The issues stated in these complaints include: struggling to pay mortgage (58), trouble during payment process (47), incorrect information on your report (21), loan modification, collection, and foreclosure (17), applying for a mortgage or refinance (15), and more. Overall, many complaints stem from borrowers’ inability to repay their mortgages.
“Vanderbilt knowingly traps people in risky loans in order to close the deal on selling a manufactured home,” said CFPB Director Rohit Chopra. “The CFPB’s lawsuit seeks to not only protect homebuyers, but also honest lenders helping people to finance the purchase of an affordable home.”
Notably, however, CFPB research shows that manufactured home loans often come coupled with higher interest rates and limited opportunity to refinance compared to traditional home mortgage loans.
In 2010, U.S. Congress required that all residential mortgage lenders document and verify borrowers’ income before making a mortgage due to widespread systemic failures at the time to consider borrowers’ income when making loans.
The CFPB lawsuit specifically alleges that Vanderbilt:
Manipulated lending standards when borrowers did not make sufficient income: In its underwriting process, Vanderbilt often disregarded evidence that borrowers did not have sufficient income or assets (other than the value of their home) to pay their mortgage and cover recurring obligations and basic living expenses, like food and health care. Sometimes, Vanderbilt originated loans for borrowers who were already struggling, making their financial situation worse. For example, Vanderbilt approved a loan for a family with 33 debts in collection and two young children. The borrowers fell behind only eight months after getting the mortgage.
Fabricated unrealistic estimates of living expenses: Vanderbilt justified its determination that borrowers could pay the loans by using artificially low estimates of living expenses that made no adjustment for higher expenses in different geographic areas. Vanderbilt’s estimated living expenses were about half of the average of self-reported living expenses for other, similar, Vanderbilt loan applicants. These families were left with little or no buffer to cover unexpected expenses. For example, Vanderbilt left one family of five with only $57.78 in net income after Vanderbilt applied its estimate of living expenses. That family first missed a payment only a year after signing the mortgage.
Made loans to borrowers it projected could not pay: In some cases, Vanderbilt violated its own policy and made loans to borrowers who, even under the company’s overly optimistic estimates, did not have enough income to cover the mortgage and basic living expenses. For example, Vanderbilt approved a mortgage for a single mother with two dependents after estimating she had insufficient income, and then sent her loan to collections when she missed a mortgage payment after only four months in the home.
The CFPB’s lawsuit seeks to stop the company’s unlawful conduct, to provide redress for harmed consumers, and impose a civil money penalty, which would be paid into the CFPB’s victims relief fund.
