Mortgage borrowers are suing Vanderbilt Mortgage for risky lending, reviving claims the Trump administration dropped against the lender earlier this year.
Christopher Stockton of Alabama and Tracy Taylor of Tennessee accuse Vanderbilt of violating the Truth in Lending Act and Regulation Z’s minimum underwriting standards. The lender, a subsidiary of Berkshire Hathaway-owned Clayton Homes, has allegedly ignored red flags in underwriting since 2014.
The lawsuit filed last week in a Tennessee federal court comes two months after the Consumer Financial Protection Bureau dropped its TILA complaint against Vanderbilt which was filed in the waning days of the Biden administration. Under acting director Russell Vought, the new-look bureau has dropped enforcement actions against numerous firms and is seeking to revoke a redlining settlement with another mortgage lender.
The new complaint was first reported by Law360.
Stockton and Taylor’s lawsuit repeats prior allegations from CFPB attorneys, specifically that Vanderbilt’s residual income model relied on unreasonable calculations. The borrowers said Vanderbilt disregarded evidence of debts in collection and made loans to borrowers who had negative net residual income.
In a statement Monday afternoon, Vanderbilt said it intends to vigorously defend itself against the claims.
In a January response to the CFPB’s lawsuit, the lender called accusations about its underwriting untrue, and said it exceeds legal requirements to assess a borrower’s financials.
The new plaintiffs said they were unaware of Vanderbilt’s poor underwriting practices until the CFPB’s Jan. 6 filing. Taylor and Stockton, who applied in 2013 and 2023, respectively, said they both had debt collection actions at the time of their applications and have missed at least one mortgage payment.
Their complaint suggests unspecified damages exceeding $5 million, and more than 100 putative class members. Plaintiffs want to bar Vanderbilt from underwriting using its “unlawful Living Expense Estimate.”
Attorneys for the plaintiffs didn’t respond to requests for comment Monday.
Vanderbilt, headquartered in Maryville, Tennessee, had $4.03 billion in origination volume in 2024, according to a Richey May database of Home Mortgage Disclosure Act data. Much of that lending was based in the Southeast, with a leading 18% of production in Georgia.
The CFPB dismissed its case against Vanderbilt with prejudice, meaning the lawsuit cannot be refiled. The decision was part of Vought’s vision for a dramatically defanged bureau, which includes less oversight of both nonbank lenders and of fair lending practices.
The regulator in an April memo said it would leave state regulators to pick up enforcement duties. States in recent years have prosecuted mortgage lenders, and the Ohio attorney general recently sued industry leader United Wholesale Mortgage for alleged predatory business practices.
