December 16, 2003

More than 15,000 Michigan homebuyers are expected to receive restitution – possibly as soon as this week – under a multi-state settlement with Household Finance, Office of Financial and Insurance Services (OFIS) Commissioner Linda Watters and Attorney General Mike Cox announced today.

Under the settlement, all Household borrowers who obtained a mortgage directly from Household from January 1999 through September 2002 are eligible for restitution. But officials pointed out that all Michigan consumers will benefit from the changes in Household’s business practices required under the agreement.

“We negotiated a strong settlement with Household, and we are even more pleased to see money flowing back to deserving Michigan consumers who were harmed by Household’s predatory lending practices,” said Watters.

The restitution checks are being mailed out today and must be cashed within 60 days of the date of the check. At least 15,843 Michigan consumers who had loans with Household or Beneficial Finance will receive refunds.

“Purchasing a home is one of the most important investments working men and women make,” Cox said. “My office will aggressively enforce the laws that protect homebuyers from unscrupulous lenders.”

The Household restitution 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 attorney generals 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. 

Household mortgage loan customers who have questions about the settlement payment procedures can contact a toll-free number, 1-888-780-2156.  Additional information is also available on the Office of Financial and Insurance Services website: www.michigan.gov/ofis/.