Clayton Homes Statement Regarding Misleading Reporting

MARYVILLE, Tenn., April 6, 2015 — Beginning with a provocative, political campaign-style video promoted via social media last Thursday, The Seattle Times and the Center for Public Integrity today published a misleading report about Clayton Homes. Here are the facts:

Manufactured housing plays a critical role in affordable housing in America, making up 50 percent of all new homes sold below $150,000. Clayton Homes, founded in 1956, will have the privilege of helping over 30,000 families with a new home this year.

Clayton Homes’ policies, procedures and training are designed to ensure that customers have a choice of lenders. A list of all available lenders is posted and provided in company-owned retail locations. Customers are encouraged to select more than one lender so they can compare options – and select the loan program that best serves their needs. The retailer selling the home receives no financial incentives from the lender the customer chooses.

Clayton Homes’ finance companies have operated in the highly-regulated mortgage lending industry for more than 40 years. Just 90 days ago, The New York Times wrote, “what distinguished Clayton Homes was that its financing division, unlike that of competitors did not engage in predatory lending or exploit its customers’ naiveté`.” Our lending policy and procedures help ensure that we evaluate each customer’s reasonable ability to repay the loan for which they have applied. Appraisals are ordered from an unaffiliated third party on all loans secured by land that we finance, and a copy is provided to the customer prior to closing of the loan.

All new home loans being originated are fixed rate and fully amortizing with an average term of 22 years. In the last 12 months, the average total down payment was just under 19 percent and customary closing fees are all disclosed to the customer. The only 30-year loans being offered by our lenders are through the government FHA title II loan program.

Interest rates on manufactured homes can be higher than loans for site-built homes because: government sponsored programs are not readily available for manufactured homes, land is often not included in the loan, and the loan size is much smaller. Unlike lenders that originate loans and sell them to investors, we hold the loans on our books, assuming the risk throughout the life of the loan rather than passing the risk on to others.