State sets payouts in settlement of Household case
Seattle Times consumer affairs reporter
The state Attorney General's Office has established a payment schedule for nearly 12,000 borrowers, ranging from $11.39 to $25,863.76, depending on the extent to which they were harmed by Household's marketing and lending practices.
The money will come from a $21 million pot, part of a $484 million nationwide settlement that was reached last fall to dispose of predatory-lending charges against Household. Since then officials had been working to devise a system to distribute the money fairly.
The 12,000 eligible Washington consumers soon will receive information in the mail about how to take advantage of the settlement.
Eligible borrowers are those who did business with Household Finance Corp., Beneficial Mortgage Corp., or Household Realty Corp. between Jan. 1, 1999, and Sept. 30, 2002.
The state Department of Financial Institutions began investigating Household after receiving about 180 complaints against the company.
The Attorney General's Office then opened its own investigation in response to the more than 160 complaints it received.
The state found that many consumers were tricked by Household into paying higher interest rates than before and instead of lowering their payments ended up deeper in debt. Some even lost their homes.
The state's investigation showed that Household and its subsidiaries had violated provisions of the state's Consumer Protection Act, the Consumer Loan Act and the Insurance Code by misrepresenting important loan terms and failing to disclose critical information to borrowers.
Officials note that choosing to participate in the state's settlement is a weighty decision because there are class-action lawsuits pending against Household.
Consumers cannot collect twice for the same claim, and so will have to choose between taking the settlement money and gambling on getting more in court, officials said.
"While this settlement cannot fully compensate the victims who were harmed, it provides them some restitution ... and sends a clear message to other companies involved in mortgage lending," said Helen Howell, director of the Department of Financial Institutions.
Peter Lewis: 206-464-2217 or firstname.lastname@example.org
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