December 24, 2002

DECEMBER 16, 2002

Attorney General Steven Rowe announced today that his office and the Office of Consumer Credit Regulation have filed a settlement of Maine's claims against Illinois mortgage lender Household International and its subsidiaries, Household Finance Corp., Beneficial Finance Corp., and Household Realty Corp. The companies have agreed with state regulators to change their lending practices and to pay $1,637,316 to Maine consumers as restitution for alleged unfair and deceptive lending practices between January 1, 1999 and September 30, 2002. During that period, Household International's subsidiaries, including Beneficial Finance Corp., loaned $137,417,209 to 2,194 Mainers. Beneficial has offices in Bangor, Augusta, Portland, and Biddeford.

Attorney General Rowe said, "There are great deals right now in mortgage loans, but there are also loan disasters made to look like loan deals. This case reminds us all to be careful consumers, to shop around, and to ask a lot of questions."

Maine's case is part of a $484 million settlement that includes all 50 states and the District of Columbia. Each state's share of the restitution fund is proportional to the state's percentage share of Household's total real estate loan secured dollar volume. Consumers who are affected will be contacted by the national settlement administrator in the next 2-3 months about their right to receive a restitution payment. It is expected that it could take up to 6 months before restitution payments are actually received by affected consumers.

Assistant Attorney General Carlos Diaz, who handled the case for the State, said, "These lenders preyed on borrowers in the so-called "sub-prime" market, those who could scarcely afford the known costs, let alone the hidden ones. We are pleased to recoup restitution for those people."

The multi-state investigation found that Household failed to properly inform consumers of loan costs and insurance premiums that were included in their loans. In other cases, borrowers who were led to believe they were receiving interest rates of about seven or eight percent were actually charged nearly twice that much. Borrowers also complained that they were charged costly prepayment penalties that were not clearly disclosed to them.

William Lund, Director of Maine's Office of Consumer Credit Regulation, indicated that "We believe that these practices have not been as prevalent in Maine as in other parts of the country. However, we know that a number of Maine consumers have been subjected to these practices and that those consumers deserve to receive this restitution." Lund also indicated that the Office of Consumer Credit Regulation will be posting Frequently Asked Questions about the settlement on its website at Consumers may also contact the Office of Consumer Credit Regulation at 1-800-DEBT-LAW (1-800-332-8529) with any questions.

Under the settlement, Household agreed to:

* Pay up to $484 million in restitution to consumers nationwide.
* Limit prepayment penalties on current and future loans to the first two years of a loan.
* Ensure that new loans actually provide a benefit to consumers prior to making the loans.
* Limit up-front points and origination fees to 5%.
* Reform and improve disclosures to consumers.
* Reimburse states to cover the costs of the investigations into Household's practices.
* Eliminate "piggyback" second mortgages.