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

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 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.