PRESS RELEASE FOR IMMEDIATE RELEASE
Contacts: Olha Rybakoff,
Deputy Attorney General,
Director - Consumer Protection Unit
Deputy Bank Commissioner
for Supervisory Affairs
Date: August 14, 2003
ATTORNEY GENERAL AND BANK COMMISSIONER ANNOUNCE PLAN TO PAY $2.4 MILLION TO
DELAWARE HOUSEHOLD FINANCE BORROWERS
(Wilmington, DE): Attorney General M. Jane Brady and State Bank Commissioner Robert A. Glen announced today that Delaware consumers who have had home loans with Household or Beneficial Finance will be able to claim settlement payments beginning this week. Notices are being sent to approximately 2,700 Delaware Household borrowers notifying them of their eligibility to share in the State's $2.4 million settlement with Household International. Under the settlement distribution plan, all Household borrowers who obtained a mortgage loan directly from Household from January 1999 through September 2002 will be sent forms to claim payments ranging from a minimum of $50 to over $7,000.
Attorney General Brady stated, “Delaware’s plan was carefully constructed to ensure that every consumer affected by Household’s former practices will receive compensation. We are pleased that Delaware consumers will benefit from this settlement.”
The consumer payment program stems from the landmark settlement between Household International and the attorneys general and banking regulators of all 50 states and the District of Columbia. Household International, through its subsidiaries Household and Beneficial Finance, is one of
the nation=s largest sub-prime mortgage lenders. The settlement resolved an investigation by the states into allegations of unfair and deceptive mortgage lending practices by Household. The states alleged that Household had overcharged borrowers with fees and interest, and had misled borrowers about other loan terms such as prepayment penalties and credit insurance.
Under the settlement, which was finalized in December 2002, Household agreed to pay $484 million dollars to the States to be distributed to eligible Household borrowers. The monetary settlement was the largest ever obtained by state attorneys general and bank regulators in a consumer protection case.
As part of the settlement, Household also agreed to implement a series of reforms in its lending operations. Court injunctions in place in all 50 states restrict prepayment penalties on current and future home loans, prohibit loan "flipping," limit up-front points and origination fees, and improve loan disclosures.
Commissioner Glen added, “We are equally pleased that Household has reformed its lending practices not only in Delaware, but also nationwide. The cooperation that all states have shown in this matter is significant.”
The Delaware settlement distribution plan provides for payments to all Household borrowers who were subject to specific unfair lending practices, including excessive loan points, and credit insurance "packing." The size of the individual payment depends on the presence of these and other loan factors as well as the amount of the consumer's loan.
All Household customers who are eligible to receive a settlement payment should receive a mail notice from the settlement administrator within the next week. Consumers who wish to participate in the settlement will have to complete and return a simple claim and release form. The actual settlement payments will be then be paid directly to the consumers by check before the end of the year.
Household mortgage loan customers who have questions about the settlement payment procedures can contact a toll-free number, 1-888-780-2156. The settlement administrator=s website address is www.household-beneficial-settlement.com. Delaware consumers can learn more about the settlement on the websites for both the Attorney General at attorneygeneral.delaware.gov and the State Bank Commissioner at www.state.de.us/bank. Answers to frequently asked questions about the settlement, as well as a link to the settlement’s website are provided on both web pages.
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