Attorney General's News Release

August 5, 2003

Nixon says Missourians with home loans from Household Finance soon can claim share of $13.1 million settlement

Jefferson City, Mo. — Attorney General Jay Nixon announced today that Missouri consumers who obtained home mortgage loans directly from Household or Beneficial Finance from January 1999 to September 2002 will be able to claim settlement payments beginning this week. Approximately 16,000 borrowers in Missouri will be notified of their eligibility and sent restitution claim forms to share in the state's $13.1 million portion of a December 2002 settlement with Household International. The $484 million nationwide settlement was the largest ever obtained by state Attorneys General in any consumer protection case.

“We insisted on a strong settlement with Household, so we are very pleased to see money flowing back to deserving Missouri consumers,” Nixon says.

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 states had alleged that Household committed unfair and deceptive mortgage lending practices; overcharged borrowers with excessive, hidden fees and interest; and misled borrowers about other loan terms, including the actual interest rate, prepayment penalties, and credit insurance.

In addition to the monetary settlement, the states also insisted that Household implement a series of reforms in its lending practices. There are now court orders in place in all 50 states which restrict Household's ability to charge prepayment penalties on current and future home loans, prohibit loan “flipping,” limit up-front points and origination fees, and improve the clarity and prominence of critical disclosures to borrowers during the loan process.

The Missouri settlement distribution plan provides for payments to all Household borrowers who were subject to specific unfair lending practices, including excessive loan points, hidden prepayment penalties, misrepresenting true interest rates, and credit insurance “packing.” The size of each individual's payment depends on the presence of these various loan factors and the amount of the 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, Nixon says. 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 or go to the settlement administrator's Web site.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to the Communications Office.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818