Monday, December 16, 2002
Attorney General Abbott Wins $7.5 Million Texas Settlement With Consumer Finance GiantAUSTIN - Texas Attorney General Greg Abbott today secured $7.5 million in refunds for approximately 11,000 Texas consumers in a settlement with finance industry giant Household International Inc. The settlement also halts deceptive consumer lending practices the finance company used in writing many of its home mortgage loans in Texas.
The settlement applies to real estate loans the company or its subsidiaries - Household Finance Corp. and Beneficial Corp. - made to Texas consumers from Jan. 1, 1999, to Sept. 30, 2002.
The company was cited for several deceptive lending practices, including
- misrepresenting interest rates;
- inflating monthly payment amounts for biweekly rates;
- misrepresenting and charging costly points and fees;
- using unsolicited checks to entice consumers deeper into debt, which Household then offered to refinance through high-cost mortgage loans;
- failure to provide clear descriptions of loan terms to customers who did not speak English.
The finance company agreed to restitution totaling $484 million nationwide, following a multi-state announcement in October. The Texas Attorney General's Office sought - and received - additional information on affected Texas consumers before announcing its own settlement today.
A settlement administrator will contact these consumers through the mail early next year to explain their options and the terms of the settlement and restitution process.
Actual restitution will be made based on the size of loan obtained by each eligible consumer. Refunds will be designed to compensate consumers for the losses they suffered in points, fees and interest costs the company deceptively applied.
The Texas settlement, as well as nationally, will result in new standards for the lending industry, particularly for those like Household that solicit business in what is known as the "subprime" lending market.