Warren Buffet’s company is a mobile-home slumlord

It’s like discovering the person we thought was Santa Claus is actually rapaciously mean old banker Mr. Henry F. Potter from It’s a Wonderful Life: respected philanthropist Warren Buffet turns out to be America’s worst mobile-home slumlord.

This is the conclusion of an investigative series by The Seattle Times and The Center for Public Integrity, the first part of which was published April 2. Buffet’s Berkshire Hathaway, the legendary investment conglomerate that has built a reputation for sensible acquisitions of famous American companies, owns a veritable rat’s nest of mobile-home interests collectively known as Clayton.

“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 found. See the story at tinyurl.com/n7pnlsf.

Mobile homes are a decent housing option for about 20 million Americans. Thanks to square-foot prices that can be far lower than stick-built homes constructed on-site and arrangements like leasing rather buying the land on which they sit, mobile homes are often the default choice for first-time rural home buyers, retirees, the disabled, immigrants and the working poor. Here in coastal Oregon and Washington, where available jobs sometimes don’t pay enough to afford a mortgage on a conventional house, mobile homes put roofs over the heads of many in the hospitality and seafood industries.

In other words, there’s nothing wrong with mobile homes. But there’s a lot wrong with taking advantage of those who lack good alternatives.

The Times/CPI story makes it clear that beyond simple corporate greed, there is much blame to go around for political leaders, who have acquiesced to millions of industry lobbying in recent years from a trade group called Manufactured Housing Institute. The result has been a hands-off approach to the industry and to the specific practices engaged in by these Berkshire Hathaway-owned firms. Some obvious legislative and regulatory reforms highlighted by the report:

• Mobile-home buyers now are usually forced to take out personal-property loans, meaning that their homes are classified in the same way as motor vehicles and can be seized with little or no warning or legal oversight. Usually, unless the mobile home is tied together with a land title, judicial foreclosure protections don’t apply.

• Despite being told 15 years ago by Congress to make mobile homes more affordable by investigating issues like loan terms, the federal Department of Housing and Urban Affairs has yet to do so. This contributes to issues like Clayton getting away with loan interest rates far in excess of the industry as a whole. Nationwide, Clayton’s rates averaged 6.8 percent more than those for a typical home loan in the 2010 to 2013 period, compared to 4 percent more for other mobile-home lenders. In Oregon, Clayton’s rates exceeded 7.5 percent more during that period, whereas other lenders averaged only 3 percent more.

• Clayton and related Berkshire Hathaway firms are described in the investigation as engaging in a wide variety of practices that most people would consider sleazy — such as running multiple mobile-home lots under different names in the same city that pretend to compete against one another, and leading borrowers to believe they can only qualify for loans through Clayton-owned lenders.

All this is an ugly picture, to which Clayton and Berkshire Hathaway have barely bothered to respond. They must do so. And state and federal intervention is long overdue.