PRESS RELEASE FOR IMMEDIATE RELEASE
Contact: Olha Rybakoff, Deputy Attorney General
Director, Consumer Protection Unit
Francis Babiarz, Deputy Bank Commissioner for Supervisory Affairs
Date: December 16, 2003
REFUND CHECKS IN HOUSEHOLD FINANCE SETTLEMENT IN THE MAIL TO CONSUMERS
(Wilmington, DE): Attorney General M. Jane Brady and State Bank Commissioner Robert A. Glen announced that eligible consumers in Delaware who had home loans with Household or Beneficial Finance will begin to receive refund checks this week. Today’s check distribution puts $2,398,611 in the hands of 2,285 claimants. An additional 8 checks are slated to be processed before the end of the year.
Under the settlement distribution plan announced in August, 2003, all Household borrowers who obtained a mortgage loan directly from Household between January 1999 and September 2002 were sent forms to claim payments ranging from $50 to $7,865. Eligible borrowers were given an opportunity to “opt-in” to the settlement. Those qualifying borrowers who returned the necessary forms to the settlement administrator by the October 14, 2003 deadline are eligible to receive refund checks.
Attorney General M. Jane Brady said, “I am pleased we were able to recover restitution directly to those consumers harmed by Household’s illegal business practices.”
The consumer rebate 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. Delaware’s share of the settlement totaled $2.4 million. 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 Aflipping,@ limit up-front points and origination fees, and improve loan disclosures.
Commissioner Glen added, “We are especially pleased that co-operative efforts, both here in Delaware and across the nation, have produced not only a significant monetary benefit, but also continuing protection for future borrowers."
The Delaware settlement distribution plan provided payments to all Household borrowers who were subject to specific unfair lending practices, including excessive loan points, and credit insurance Apacking.@ 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.
In addition to the consumer rebates, the Household settlement provided consumer education funds to each state. In Delaware, the Office of the State Bank Commissioner teamed up with the Attorney General’s Consumer Protection Unit and developed a joint financial education campaign based on the most frequent questions and complaints received from the public by those offices on the issue of borrowing money. Over a dozen community meetings were held this Fall as part of the education campaign.
A brochure on car title lending, payday lending, high cost mortgages and check cashing fees has been developed as part of the campaign. The brochure is available by contacting the State Bank Commissioner’s office at (302) 739-4235 or the Attorney General’s Consumer Protection Unit at 800-220-5424. The brochure is also available on the Attorney General’s website at attorneygeneral.delaware.gov/. A second brochure, “Don’t Borrow Trouble,” originally created by the State Bank Commissioner on the topic of predatory lending, is also available by phone or on the website.
Members of the Attorney General’s office and Office of the State Bank Commissioner are available to attend community meetings to discuss lending issues with consumers. If your organization would like to host a meeting, please contact Lori Sitler at (302) 577-8314.