
Minorities exploited by Warren Buffett’s mobile-home empire - smacktoward
http://www.seattletimes.com/seattle-news/times-watchdog/minorities-exploited-by-warren-buffetts-mobile-home-empire-clayton-homes/
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hayksaakian
A question to the educated commented:

What is the purpose of selling loans to people who you know will probably
default?

Is it to sieze their collateral?

From the article, I noticed this snippet:

Shorts went into the store looking for payments of $300 to $400 a month, she
said, something she could afford on her $749 in monthly disability benefits.

The saleswoman, she recalled, later told her that she was lucky to qualify for
a loan on a bigger, used mobile home priced at $55,000. Clayton financed it
for her with a Vanderbilt loan at a 15.77 annual percentage rate, after a down
payment of $7,000.

When she and Leroy returned for the closing, they said that, like many other
buyers, they were rushed through it. Agents quickly turned over page after
page, saying, “You need to sign right here, sign here, sign here,” recalled
Leroy, who said he has been unable to work since he went blind in his right
eye.

The monthly payments were $851 — about $100 more than the amount she received
from her fixed disability payments. Shorts, who said she didn’t realize how
much she would have to pay every month, made just two payments, then defaulted
in June 2014. Clayton filed to seize the home that October.

Even when loans go bad quickly, the sale can be profitable for Berkshire
Hathaway. Clayton often marks up new homes about 70 percent over invoice,
company documents show. After a 20 percent down payment and thousands of
dollars in fees added into the loan, Clayton can recoup more than half the
wholesale price of the home in a year.

When borrowers stop paying, the company can repossess and resell the home,
again with another markup.

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EGreg
_" The company’s in-house lender, Vanderbilt Mortgage, charges minority
borrowers substantially higher rates, on average, than their white
counterparts. In fact, federal data shows that Vanderbilt typically charges
black people who make over $75,000 a year slightly more than white people who
make only $35,000."_

Huh? This is not clearly an example of that.

~~~
hayksaakian
So much "slightly more" throughout the article.

Another note:

At one point I noticed "thousands of dollars over the life of the loan" which
could be not that much if the loan is 20 years.

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hueving
"creditor appears to use credit score to determine credit worthiness... more
on this at 10"

