Monday, February 29, 2016

"Warren Buffett Defends Clayton Homes Vs Accusations of Predatory Practices", which the News and Record, owned by Warren Buffett...

"Warren Buffett kicked off the question-and-answer session at the Berkshire Hathaway Inc. annual meeting Saturday by

defending the practices of Clayton Homes Inc., a subsidiary and the country's largest manufactured housing company.

Clayton Homes, which builds, sells, finances, leases and insurers its manufactured houses, has come under shareholder scrutiny

after an April article by the Center for Public Integrity and The Seattle Times newspaper alleged predatory collection and

lending practices, high fees and other problems at the company.

The article said these practices led to unsuspecting borrowers getting trapped in loans they couldn't afford.

"I make no apologies whatsoever for Clayton's lending practices,"

"Clayton has behaved very well."

Warren Buffett in response to a question from a Berkshire shareholder
 who said he was "disgusted" that Berkshire would support unethical practices.

...Clayton Homes sold 45% of all manufactured homes purchased in the U.S. last year, according to the company. Unlike

traditional houses, which are built on site, manufactured homes are built in factories and then transported to be installed on

location. These homes usually are priced far lower than site-built homes and targeted to low-income people who don't qualify

for government-insured mortgages.

"It's true that manufactured housing hits the lower end of the market...the question is, can you lend intelligently to people [so

that they can continue] making those payments and keeping their house?" Mr. Buffett said. In that regard, he said, Clayton has

been "exemplary."

The U.S. House of Representatives recently voted to reduce safeguards for people who have loans with steep interest rates,

scaling back financial-protection rules put in place as part of the 2010 Dodd-Frank Act.

Berkshire bought Clayton in 2003 for $1.7 billion in cash.

...The article also said that because Clayton owns lending companies and operates under multiple names, it has misled buyers

into thinking they were getting more of a choice than they really were. Mr. Buffett, who said earlier that he had prepared a

rebuttal to the story that he would share at the meeting, said that each of Clayton's more than 1,000 retailers clearly mention a

variety of lending options including local banks and credit unions, and that the terms are listed succinctly.

...He acknowledged that people get upset when they lose their homes due to a default, but said that "in the past three years, I

have received not one call from any party in connection with a Clayton Home."

From the News and Record's website, which probably didn't make it into a print version;

"Clayton's lending practices have been questioned over the past year in stories by The Seattle Times and The Center for Public Integrity. Buffett defended Clayton at last year's annual meeting.

Buffett says Clayton follows state and federal regulation and retains ownership of every mortgage it finances."