Berkshire Hathaway subsidiary accused of discrimination
31 Dec 2015
The mobile home subsidiary of Warren Buffett's Berkshire Hathaway has strongly denied renewed accusations that it exploited minorities.
The accusations came in the third installment of an investigative series that kicked off in April. The Seattle Times and BuzzFeed allege that
Clayton Homes, the country's biggest maker of new "manufactured" homes, "systematically pursues unwitting minority homebuyers and baits them into costly subprime loans, many of which are doomed to fail."
According to the story, a number of minority customers were illegally steered to Vanderbilt Mortgage, a Clayton subsidiary, for loans that charged minority borrowers "substantially higher rates, on average, than their white counterparts" with similar incomes.
Clayton is also accused of using Spanish to market its homes, but customers were rushed through signing documents in English, ending up with unexpectedly high interest rates and monthly payments, along with unforeseen fees and insurance.
According to the story, Clayton's practices were "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."
With a substantial markup, large fees and down payments, Clayton gets to "recoup more than half the wholesale price of the home in a year" so that even when loans go bad quickly it still makes money. Clayton could also repossess and resell a home when buyers defaulted, the story said.
According to the story, which cited over 280 customers, employees and experts, including some Clayton insiders who were outraged by the company's practices, employees regularly used racially charged language to describe black managers or minority customers.
The report said, Clayton expanded its minority customer base to 31 per cent of all its loans from 22 per cent in 2008.
Denying the charges, Clayton said in a statement, that it was ''activism masquerading as journalism'' and said, ''We categorically and adamantly deny discriminating against customers or team members based on race or ethnicity.''
