Warren Buffett's image as an avuncular business genius who has all-American interests at heart might take a hit after a scathing investigation by the Seattle Times and the Center for Public Integrity. It alleges that Clayton Homes, a giant in the mobile-home industry owned by Buffett's Berkshire Hathaway, is duping poor people into unscrupulous loans. Here's the main summation:
- "Buffett’s mobile home empire promises low-income Americans the dream of homeownership. But Clayton relies on predatory sales practices, exorbitant fees, and interest rates that can exceed 15 percent, trapping many buyers in loans they can’t afford and in homes that are almost impossible to sell or refinance."
The investigation looked at more than 100 sales in 41 states and found a "consistent array of deceptive practices." For example, Clayton goes by so many names, at least 18, that mobile home customers who think they're shopping around actually aren't. It controls virtually every aspect of the deal, from the construction to the real estate sale, to the loan itself, a fact that customers often don't realize because of those different names. Buyers often encounter exorbitant fees, loan terms that change abruptly, and ruthless collection agents. Spokespersons for Clayton and Berkshire would not be interviewed, but a Clayton statement insists that its “policies, procedures and training are designed to ensure that customers have a choice of lenders," reports the Omaha World-Herald. Read the Seattle Times piece here and the CPI version here. (Read more Warren Buffett stories.)