Predatory pay-up kicks in
December 20, 2002
Household Finance's $484 million settlement takes effect
Inman News Features
The nationwide settlement between Household Finance and a group of attorneys general and regulatory agencies from multiple states in a predatory lending enforcement action has taken effect today.
In October, the mortgage lender agreed to pay up to $484 million in restitution to consumers nationwide, in addition to changing its lending practices.
Household was accused of practicing unfair and deceptive lending in the "subprime" lending market over the past four years.
Consent decrees have been entered in 41 states, including the District of Columbia, representing more than 80 percent of Household's non-prime real estate secured branch consumer lending business.
The agreement covers real estate loans made through the company's Household Financial Corp. and Beneficial consumer lending branches from Jan. 1, 1999 through Sept. 30, 2002.
Under the terms of the settlement, Household also agreed to limit prepayment penalties on current and future loans to only the first two years of a loan, ensure that new loans provide a benefit to consumers prior to making the loans, limit up-front points and origination fees to 5 percent, improve disclosures to consumers, reimburse states to cover the costs of the investigations and eliminate "piggyback" second mortgages.
In a company statement, Household CEO William F. Aldinger said, "The consumer protection and compliance measures endorsed by this agreement will establish a new standard for the consumer lending industry." Aldinger said the company believes these measures will make it stronger and more responsive in the future.
Copyright: Inman News Service