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Post date: August 4 2003

Predatory Lending Settlement Yields $37 Million For New Yorkers

New York State Attorney General Spitzer and Governor George E. Pataki today announced that nearly 25,000 New Yorkers are eligible for settlement payments totaling approximately $37 million as part of the landmark settlement New York State reached with Household International Inc. last year. Borrowers will receive notices in the mail shortly informing them of their eligibility to receive a refund of some loan fees and finance charges paid to Household or Beneficial.

"Monetary compensation for thousands of New Yorkers who were victimized by Household Finance is a critical component to this landmark settlement. The injunctive relief obtained in this case - along with the recently enacted tougher state law - serves as a message to mortgage lenders that predatory practices will not be tolerated."

Governor George E. Pataki said, "This landmark settlement is a tremendous victory for New York’s consumers. We are committed to protecting families throughout New York from predatory lending practices, and I am very proud of the role our State Banking Department played in securing this important multi-state agreement."

Superintendent of Banks Diana Taylor said, "I am very pleased that New York borrowers will receive their refund by the end of the year. This is an historic result that could not have been successful but for the cooperation of the state banking regulators and the state attorneys general who worked together for the betterment of their constituents. This agreement also sends a very clear message to all who would take advantage of consumers. The Banking Department is committed to eliminating predatory lending practices and we will do everything in our power to prevent abusive loans from being made in New York State."

Under the settlement, many New York Household and Beneficial borrowers who obtained a mortgage loan directly from Household or Beneficial between January 1999 and September 2002 will be eligible to receive restitution. Payments range from a minimum of $42 to a maximum of $21,000.

In December 2002, Spitzer’s office and the State Banking Department, as part of a multi-state group comprised of all 50 states and the District of Columbia, reached an unprecedented settlement with Household International Inc. The settlement followed lengthy investigations that uncovered various predatory 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 balloon notes and credit insurance.

The monetary settlement, $484 million nationally, was the largest ever obtained by state attorneys general and financial regulators in a mortgage lending case. In addition, 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.

All Household and Beneficial customers who are eligible to receive a settlement payment should receive a letter and a release form in the mail in mid-August. Consumers who wish to participate in the settlement must complete and return the release form by October 14, 2003. The actual settlement payments will then be paid directly to the consumers by check before the end of the year.

Spitzer advised consumers to seek the advice of a private attorney or counseling through a non-profit organization when evaluating the potential benefit of opting-in to the settlement.

Household and Beneficial mortgage loan customers who have questions about the settlement payment procedures can visit the settlement website at www . household-beneficial-settlement . com or call a toll-free number, 1-888-780-2156.