Attorney General Lockyer Statement on Final Settlement of Predatory Lending Case Against Household Finance That Nets California $91 Million

December 16, 2002
02-139
FOR IMMEDIATE RELEASE
(916) 324-5500

(SACRAMENTO) – Attorney General Bill Lockyer today issued the following statement on the finalization of a $484 million settlement, signed by all 50 states and the District of Columbia, in a predatory lending enforcement action against Household Finance Corporation:

"Household deceived and exploited homeowners who worked hard to achieve the American dream. This settlement provides restitution to the working families victimized by Household's predatory lending practices, and requires Household to implement reforms that should provide a model for the industry.

"We now will move as quickly as possible to distribute to California consumers the more than $91 million they are due under the settlement. We must receive from Household and analyze the files of some 40,000 California customers in order to determine how to distribute the restitution funds. We hope to notify consumers of their restitution amounts in mid-2003.

"However, current Household consumers will see an additional benefit from the settlement no later than Feb. 14, 2003. The agreement requires Household to reduce from five years to two years the period in which it can impose prepayment penalties on loans. Californians who signed Household loans between Jan. 1, 1999, and Sept. 30, 2002, and who still have outstanding loans on Feb. 14, 2003, will be able to save an aggregate total of more than $50 million in prepayment penalties, because on Feb. 14, 2003, Household must unilaterally reduce their penalty period to two years."

Attached please find summaries of the restitution process and the settlement terms.