asmartguylikeyou

What I find interesting is that in every loan document I have ever examined the clearest portion of the contract gives the interest rate, the amount borrowed, the finance cost, and the total amount to be paid over the life of the loan, along with explanations of the finance cost such as "what you will pay in interest over the life of the loan in exchange for the money being borrowed". I find it hard to believe, short of being illiterate, that this information could be misconstrued.

I have two questions. The first is what specific steps would you like to see Berkshire Hathaway take to rectify the "abuses" you have uncovered? I see a lot of "Look at what is going on here!!!" but not a lot of talk about potential solutions.

The second part of my question is actually to that point as well; to what extent do you believe there to are feasible solutions to some of the issues presented in your piece?

I see a lot of hand wringing over vertical integration along with a great deal of concern over the plight of Clayton's customers. I feel it is necessary to point out that a lot of these wrongs as you perceive them are the result of much larger structural issues that create the realities of rural poverty. You have high risk customers with terrible credit or with little to no credit history. There aren't a lot of lenders willing to service this customer base. Outside of a rural environment there would be other options for housing such as renting an apartment, or potentially federally subsidized housing, but when you live in the middle of nowhere you don't exactly have a lot of options.

A hundred years ago these folks would have built their own homes, and worked their own land. The collapse of the agrarian economy has left these communities not only underserved by potential lenders, but basically invisible to the wider culture. I have been to the places where a lot of these folks live. They are food deserts. They don't have access to basic government or health services. There are few opportunities for employment, and a lot of people subsist off of social security benefits. In this context someone without a place to live doesn't have a lot of options. One thing they often do have is land. Land to put a home on.

A local dealer selling you a manufactured home financed through one of the two major lenders is basically your only option. Now it is easy to point the finger and say "EXACTLY".-that these people are being taken advantage of, but when you are the only lender willing or capable of taking the risks, what exactly should you do? Stop providing your services altogether? If you are a potential customer who needs a roof over your head, what would you rather do? Go homeless, or pay more in interest because you can't qualify for a traditional loan. As for the idea that these homes should appreciate in value, that kind of goes against the whole point of the product. Mobile homes are cheap. They are cheap for a reason, because if they were expensive the people who need them wouldn't be able to afford them. Name one type item that you would purchase through a personal property loan that appreciates in value over time. I can't think of one.

I think it is easy to look at this and see nothing but predation and greed. I think the issue is much more complex than that. As I said earlier, these people are invisible. The issue of rural poverty is a non-issue in this country. The government has failed them. I appreciate the idea of giving these people a voice, but I think they need someone to advocate for them outside of the context of take-down piece of Warren Buffet. I mean it makes for compelling journalism "Billionaire Tycoon Builds Empire on the Back of the Everyman" but in reality the issues faced by these people are much deeper than the lenders that provide them with housing. It is my hope that that is the conversation that can come out of this.

Anyway, there is my rant. What would you like to see done, and to what extent do you believe the issues that you bring up are much more of a symptom, rather than the disease itself, of the wider structural issue of inequality and poverty in this country?

Perhaps I should unburden my question of all of that commentary.

What would you like to see change to address the issues you uncovered?

It seems that you are implying that the answer to that question lies outside of the scope of the article you wrote since you refer to its focus being specifically on the facts. If that is the case, why come here and field questions? If you read the article you understand what you take issue with, now what would you like to do about it? What would the transparency you seem to want look like? Do you think that Clayton ought to be broken up to better serve the interests of consumers? Do you believe that greater federal oversight of the manufactured housing industry will result in positive changes for its customers?

If your intention was to bring light to the issue in order to start a conversation about potential solutions, I would assume you would have a number of ideas yourselves about what should be done here. If your intention was simply to link Warren Buffet to predatory lending, then I suppose you have made all the case you are willing to make.