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Collection Harassment Class Action

2 lawsuits filed against Vanderbilt Mortgage

November 15, 2006


The mortgage lending subsidiary of Warren Buffett's corporate empire has been sued over alleged collection harassment.

Two class action lawsuits have been filed against Vanderbilt Mortgage and Finance Inc.

One of the lawsuits was filed on behalf of two women from Myrtle Beach and Conway, S.C., while another was filed on behalf of the owners of seven homes in four different South Carolina towns against the Maryville, Tenn.-based lender.

The plaintiffs allege Vanderbilt telephoned them as many as eight times a day, including to them at their work places. Phone calls were also made to neighbors and relatives of the two, telling them that the borrowers owed money on their mortgages and should be told to make their payments, explained their attorney, David Breen, of Myrtle Beach.

"These calls were made after their payments were due, but before the end of the grace period, before late fees could be assessed," he alleged. "So their payments actually weren't late."

Vanderbilt's grace period, Breen notes, was 11 days.

A spokesman for Vanderbilt called the charges "unfounded," saying that "when the facts come out [in court] it will show that we are stringent proponents of fair collection practices. We practice everything there is in the fair collection procedures [the Fair Collection Practices Act]."

Vanderbilt, through its local legal counsel, B. Rush Smith III, of Columbia, S.C., has filed a motion to dismiss the suit on the grounds of legal insufficiency. That motion has yet to be heard.

If that move fails, Smith explained, Vanderbilt will have 10 days to file a response to the actual allegations contained in the suits.

If and until that happens, he, like the Vanderbilt spokesman, declined to address the specific charges in the suits.

Breen said that after his suits became publicly known, he was contacted by two others, someone from West Virginia and another person from Myrtle Beach. He also noted that dozens of complaints against Vanderbilt were listed on, a consumer watchdog Web site.

Since 2004, 10 complaints have been filed against Vanderbilt Mortgage with the Division of Consumer Affairs of the State of Tennessee's Department of Commerce and Insurance, according to division records. The outcome of those complaints could not be immediately determined, but the most common complaint was for harassment of borrowers, including the use of illegal collection tactics.

And, in the last 36 months, the Better Business Bureau of Tennessee, of which Vanderbilt is a member, has received 218 complaints involving Vanderbilt, according to BBB records. Eighty-nine of those complaints were resolved during the past 12 months.

Breen told that Vanderbilt's aggressive phone calls to the borrower's neighbors and relatives ostensibly were made to obtain additional phone numbers for the woman but that the recipients of the calls also were asked to tell the borrowers to make their mortgage payments.

"Those calls made my clients concerned that they had to make their payments so that Vanderbilt would not call their relatives," Breen commented.

If the suits proceed, he said he will seek to obtain Vanderbilt's phone records to show their calling practices towards borrowers who miss their first-of-the-month mortgage payment due dates.

Vanderbilt is the finance division of Clayton Homes, which builds and sells modular and manufactured homes. Clayton Homes is a subsidiary of Warren Buffett's Berkshire Hathaway Inc., which acquired Clayton Homes in August 2003.

Jerry DeMuth is an award winning journalist who has been reporting for four decades.

e-mail Jerry at [email protected]
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