Protect Vulnerable Home Buyers
For Immediate Release — May. 22, 2015
Lindsay Taylor, Consumer Marketing Manager
The lawmakers and corporate allies working to undo protections for buyers of manufactured homes aren’t giving up, even as their phony arguments are unmasked. Last month, the House passed a bill to weaken new rules against predatory lending in the sale of manufactured homes. This week, the Senate Banking Committee is on track to pass a bill that includes a similar measure.
This deregulatory push would harm the mostly rural, older and hard-pressed buyers of mobile homes, as has been made clear in a recent series of articles in The Seattle Times about Clayton Homes. Clayton, which is owned by Warren Buffett’s Berkshire Hathaway, is the nation’s biggest builder, seller and lender in manufactured housing. The newspaper revealed this week that more than 90 percent of the market that would be deregulated by the bills is controlled by Clayton Homes.
It also reported that information used by supporters of the House bill did not check out. Representative Jeb Hensarling, the chairman of the House Financial Services Committee, has argued that two small lenders were harmed by the rules, which went into effect last year. But federal data showed that one of the lenders, a credit union in Maine, had made only two mobile-home loans in the nine years before the new rules. The other, a Minnesota bank, said it had actually increased its mobile-home lending after the rules took effect.
The real victims are buyers who need protection from the high-pressure sales tactics and excessive costs of doing business with Clayton, as detailed in the articles, which were produced with the Center for Public Integrity. But Mr. Buffett, speaking at this month’s Berkshire Hathaway shareholder meeting, said he made “no apologies whatsoever about Clayton’s lending terms.” He added that Clayton loans had a 3 percent default rate. Yet later, in a television interview, he conceded that the rate could be higher depending on how it was calculated. An industry consultant quoted in the newspaper report, citing his own research and conversations with Clayton executives, said that loans by Clayton’s two lenders had failure rates of 33 percent and 26 percent. Clayton told The Seattle Times those figures were wrong but declined to discuss details.
The rollback of safeguards for mobile-home buyers is not the only objectionable measure in the Senate bill, which would also weaken many other recent financial reforms. But it is the most glaring in the way it would put profits from predation above protections for consumers. With Republicans apparently determined to pass the bill, it will be up to Democrats to stand up for consumer protection in committee and on the Senate floor.