Tags: warren buffett | berkshire hathaway | clayton loans | abusive

Buffett Offers 'No Apologies' for Clayton Loans Called Abusive

Sunday, 03 May 2015 11:31 AM

Warren Buffett said the Clayton Homes unit owned by his Berkshire Hathaway Inc. has behaved well and an article that questioned the business’s practices contained important errors.

Clayton is “rather extraordinary in the home-building and mortgage business,” Buffett said Saturday during Berkshire’s annual meeting in Omaha, Nebraska. He said he’ll offer “no apologies” for the operation.

The Seattle Times and Center for Public Integrity reported last month on “deceptive” sales and lending practices at Clayton, trapping borrowers in residences that were difficult to resell.

Customers said collection agents working for the mobile- home manufacturer told them to cut back on food and medical care to make house payments, according to the report.

Buffett described as “nonsense” an assertion in the article that Clayton’s profit margin is 20 percent. He questioned whether the authors understood accounting principles, and showed slides that indicated the unit’s after-tax profit is 2 percent.

“Anyone who understands accounting wouldn’t make a mistake like that,” Buffett said.

The Center for Public Integrity and the Seattle Times issued a statement after Buffett’s remarks, saying that their reporting didn’t claim the profit margin was 20 percent.

“The story simply quoted an affidavit from a Clayton Homes executive detailing average profits on three years of home sales in one state, which were about 20 percent of the retail price,” according to the statement. “The Center and the Times stand by their reporting.”

Clayton’s Growth

Clayton has expanded since Berkshire bought it in 2003. It now builds almost half the new units in the industry, according to the Times. The manufacturer also makes six times more loans to buy mobile homes than any other lender, the report showed.

Clayton called the article “misleading” and rebutted the newspaper’s claims in a two-page statement, saying most customers are satisfied with their homes and mortgages.

“The unfortunate reality is that some customers have trouble making their monthly payments when they experience a significant life-event – divorce, job loss, or medical issue,” Clayton managers wrote.

“When a home is foreclosed no one wins – the company loses money and more significantly the customer loses their home.”

Buffett, 84, built Omaha-based Berkshire over the past five decades into one of the biggest companies in the world.

Its operations now include insurers, manufacturers, retailers, electric utilities and one of the largest railroads in the U.S.

© Copyright 2020 Bloomberg News. All rights reserved.


   
1Like our page
2Share
StreetTalk
Warren Buffett said the Clayton Homes unit owned by his Berkshire Hathaway Inc. has behaved well and an article that questioned the business's practices contained important errors.
warren buffett, berkshire hathaway, clayton loans, abusive
388
2015-31-03
Sunday, 03 May 2015 11:31 AM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved