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Buffett's Clayton homes traps poor borrowers, newspaper says
[SEATTLE] Clayton Homes, the manufactured-housing business owned by Warren Buffett's Berkshire Hathaway Inc, uses aggressive sales and lending practices that traps some borrowers in homes that are difficult to resell, the Seattle Times reported.
Clayton called the report "misleading" and rebutted the newspaper's claims in a two-page statement, saying the majority of customers are satisfied with their homes and mortgages.
In a report published late Thursday in collaboration with the Center for Public Integrity, the Times said Clayton has grown into a mobile-home colossus since Berkshire bought it in 2003 and now builds almost half the new units in the industry. Clayton also makes six times more loans to buy mobile homes than any other lender, the report said.
Surprise fees and loan terms that changed suddenly after borrowers had made deposits were among the "deceptive practices" documented in the report, which cited descriptions by more than a dozen Clayton customers. Customers said collection agents working for Clayton told them to cut back on food and medical care to make house payments, according to the report, which was labeled as first in a series.
Clayton told the newspaper that it helps customers find houses within their budgets and tries to open doors "to a better life, one home at a time."
The company said in the statement that its policies, procedures and training "are designed to ensure that customers have a choice of lenders." During the last year, new home loans were all fixed rate and fully amortized, with an average term of 22 years, according to the statement.
"The unfortunate reality is that some customers have trouble making their monthly payments when they experience a significant life-event -- divorce, job loss, or medical issue," Clayton managers said in the statement. "When a home is foreclosed no one wins -- the company loses money and more significantly the customer loses their home."
Mr Buffett, 84, built Omaha, Nebraska-based Berkshire over the past five decades into one of the biggest companies in the world. Its operations now include insurers, manufacturers, retailers, electric utilities and one of the largest railroads in the US.