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MAINE SETTLEMENT REFUND FOR HOUSEHOLD-BENEFICIAL CUSTOMERS
August 5, 2003
AUGUST 5, 2003
CHARLES DOW, SPECIAL ASSISTANT ATTORNEY GENERAL, 207-626-8577
WILLIAM LUND, DIRECTOR, OFFICE OF CONSUMER CREDIT REGULATION, 207-624-8527
Attorney General Steven Rowe and Maine Office of Consumer Credit Regulation Director William Lund today announced that many Maine consumers who had home loans with Household Finance or Beneficial Finance will be able to claim settlement payments beginning next week. Notices will be sent August 15 to approximately 2,150 Household and Beneficial borrowers in Maine notifying them of their eligibility to share in the state’s $1.6 million settlement with Household International. Under the settlement distribution plan, all Household or Beneficial borrowers who obtained a mortgage loan from January 1999 through September 2002 will be sent forms to claim payments ranging from a minimum of $100 to more than $2,000.
“We were pleased to have reached a strong settlement with Household, but we are even more pleased to see money flowing back to deserving Maine consumers,” Attorney General Rowe said.
“Not only will this settlement result in refunds for affected consumers, but in addition Household has agreed to institute new standards to prevent future lending abuses,” said Consumer Credit Director Lund.
The consumer payment program stems from the landmark settlement between Household International and the attorneys general and consumer credit offices 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. The states alleged that Household overcharged borrowers with fees and interest and misled borrowers about other loan terms such as “EZ pay” plans.
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 attorneys general 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.
Beneficial Finance has offices in Augusta, Bangor, Biddeford and Portland.
The Maine settlement distribution plan provides payment to all Household borrowers who were subject to specific unfair lending practices, including excessive loan points, high interest rates, and misleading payment plans.