The U.S. Department of Housing and Urban Development is investigating East Tennessee-based company Clayton Homes, Inc.
Brian Sullivan, Supervisory Public Affairs Specialist with the U.S. Department of Housing and Urban Development, confirmed to 10News Monday that HUD is looking into a "fair housing" complaint tied to the Maryville-based home builder.
He said the investigation is ongoing with no determination or finding at the moment.
10News requested an interview with Clayton Homes and received two statements in response. Clayton Homes wrote initially:
"Over its 60 year history, Clayton Homes has built a culture of compliance and does not tolerate discrimination of any kind in its interactions with customers. We value working with federal and state agencies to improve processes and ensure all regulatory requirements are met and our customers are protected and treated fairly. Last year, our lenders were the subject of more than 40 routine agency examinations resulting in no fines."
Clayton Homes released an updated statement later that evening:
"Our lenders have Spanish-speaking personnel in both the originations and servicing departments to assist customers. We have procedures and systems in place designed to connect Spanish-speaking customers to a designated representative as quickly and efficiently as possible, to address their needs.
Our lenders leverage decades of experience to provide access to a manageable monthly payment for all customers. We perform a rigorous underwriting process to determine that every borrower – regardless of race or ethnicity - has the reasonable ability to repay the loan. And then we stand by our customers through the life of their loan, including offering loan modifications, extensions, and payment assistance programs where possible and when necessary."
In January 2016, senior house Democrats called for the federal investigation of Warren Buffett's manufactured housing corporation.
U.S. Rep. Maxine Waters of California, along with three other democratic lawmakers from Minnesota, Misouri, and Massachusetts, called for a joint Department of Justice and Consumer Financial Protection Bureau investigation in response to a Seattle Times and Buzzfeed News’ investigative series concerning allegations of discriminatory lending and collection practices by Warren Buffett-led Berkshire Hathaway subsidiaries Clayton Homes, Vanderbilt Mortgage, and 21st Mortgage.
The letter states the investigative report "provided extensive detail into allegations of highly problematic lending and collections practices, which if true, are clear violations of federal fair lending and consumer protection statutes".
It requests an update on the agencies' supervision and enforcement efforts regarding allegations, set forth in the investigative series, that Clayton Homes, Inc. presents a business model that "targets low- and moderate-income minority borrowers and that steers them into high-cost loans that often fail to properly account for a borrowers' ability to repay".
"Because a majority of those in the minority population did not fully understand the loan documents, those were the majority of people we were collecting on," said Gwen Schablik, a former Clayton Homes employee who says she saw discrimination firsthand. "I realized that there were probably some practices that they were doing that were discriminatory. I hate to say it was intentional, but it came across as being intentional."
Schablik quit her job at Clayton and was interviewed by federal investigators last August. She says they asked her about questions regarding loan documents and collection practices.
She says many of the loan documents offered to prospective buyers were not provided in languages other than English, confusing non-English speakers.
"One of the things that I noticed in training was that all of the loan documents were in English and they were not made available in bilingual documents," Shablik said. "It just finally made me realize that I couldn’t be there anymore because that wasn’t the right thing. Clayton is not doing the right thing."
Since WBIR's story aired on May 22, 2018 at 6 p.m., Clayton Homes provided an updated statement as a response:
"Our lenders have Spanish-speaking personnel in both the originations and servicing departments to assist customers. We have procedures and systems in place designed to connect Spanish-speaking customers to a designated representative as quickly and efficiently as possible, to address their needs.
Our lenders leverage decades of experience to provide access to a manageable monthly payment for all customers. We perform a rigorous underwriting process to determine that every borrower – regardless of race or ethnicity - has the reasonable ability to repay the loan. And then we stand by our customers through the life of their loan, including offering loan modifications, extensions, and payment assistance programs where possible and when necessary."