In a move that underscores the ongoing scrutiny of the lending industry, the Maryville-based Vanderbilt Mortgage and Finance, Inc. is facing legal action by the Consumer Financial Protection Bureau (CFPB) over allegations of predatory lending practices, court records reviewed by WBIR reveal.
As stated in the lawsuit, there are serious claims against Vanderbilt, a subsidiary of Clayton Homes, Inc., for approving loans to borrowers without adequately verifying if they could handle the financial burden, borrowers were supposedly hit with extra fees, some even losing their homes, with the CFPB alleging that the company engaged in practices that took advantage of the most financially vulnerable individuals, these individuals with the greatest need for reasonable loans being saddled with agreements that they were not in a position to honor, according to WVLT.
Allegations detailed in the lawsuit include Vanderbilt's underwriting process that employed "implausible estimates" for monthly living expenses, drastically underestimating the true cost of living, and as a result, leaving families with insufficient net income after mortgage and debt payments—one family, for example, was left with just $57.78 each month, reported by WATE.
Despite Vanderbilt Mortgage refuting the allegations, calling them "unfounded and untrue," as a spokesperson expressed in a statement to WATE. The CFPB's lawsuit accuses Vanderbilt of not only miscalculating living expenses but also issuing loans to applicants even when they were already entangled in significant debt, for instance, endorsing a loan to co-applicants who had "33 debts in collection, insufficient assets to pay those debts, and two young children," and fell behind on their mortgage payments within just eight months, highlighting a pattern of alleged systemic neglect for borrowers' financial realities, WVLT reported.
The legal filing put forth by the CFPB seeks to prevent Vanderbilt from continuing these alleged lending malpractices, also pushing for the court to level damages, restitution, and penalties and other costs against Vanderbilt, as detailed by WBIR. The CFPB's actions aim to assert federal law's stance against financial products that can harm consumers and stands as a signal to other lenders to operate with greater consideration of borrowers' financial limits.
