[Posted August 8, 2003].
IOWA DEPARTMENT OF JUSTICE
HOUSEHOLD (HFC) / BENEFICIAL SETTLEMENT - IOWA CUSTOMERS
Frequently-Asked Questions (FAQs).
What is this settlement
This landmark consumer protection
settlement addressed concerns that attorneys general and state regulators
had about what they believed were unfair and deceptive mortgage lending
practices by Household Finance (HFC) and Beneficial Finance. In December
2002 all 50 states and D.C. entered into an agreement with Household.
Under the terms of the agreement, Household agreed to change the lending
practices in question, and to pay $484 million nationally. Each state
got a portion of that based on the amount of loans made by HFC and Beneficial
in that state. Iowa's share was $1.49 million.
Which loans are
covered by the settlement?
The people who are eligible
for a settlement payment are those who got one or more home-secured (mortgage)
loans through an HFC or Beneficial Finance branch office between January
1, 1999, and September 30, 2002. Even if you have since paid off such
a loan or refinanced it with another lender, you are eligible.
Please note that this settlement
does not cover:
* credit card debt, auto loans,
or personal loans made by Household or Beneficial;
* mortgage loans which were
originally made by a lender other than Household or Beneficial, but were
later sold to Household; or
* mortgage loans which were
made by a different lender, but are being serviced by Household ("serviced"
means Household is collecting the loan for the lender.)
Am I on the list
to receive a payment from this settlement?
The Iowa Attorney General's
office does not have a
list of the customers who are eligible for a payment. A Settlement Administrator
is handling the claims, and only the Administrator has the list.
People eligible for the payment
will receive a postcard alerting them to be on the lookout for a letter
with more details. The letter was scheduled to be sent to eligible borrowers
in mid- to late August. With that letter will be a personalized form that
will tell you the specific minimum payment amount for which you are eligible.
If I am eligible,
how much will my payment be?
There are several factors
which determine the amount. Each state developed its own plan for how
to distribute the funds. In Iowa, the plan
* gives each borrower-household
a minimum of $100, then
* uses a formula that takes
into account five factors from each consumer's loan terms: credit insurance
"packing," prepayment penalties paid, loan amount, points charged, and
the loan-to-value ("LTV") ratio. (The "LTV" ratio means the size of your
loan or combined Household/Beneficial loans to the value of your house.)
The minimum payment for the
majority of eligible borrowers in Iowa will be $100 -- but the amount
could be much more, depending on the other factors.
Why do you talk
about the "minimum payment" I would be eligible for? Could the payment
be higher than the amount listed in my letter?
It could be higher, depending
on how many eligible households choose to take the settlement. These
payments will not be sent automatically to every eligible consumer. You
have to fill out the form and send it in by October 14, 2003. If
you do not, the payment you could have received will go back into the
"kitty" and be redistributed to the other eligible borrowers who did sign
The minimum payment amount
in your letter assumes that all 3531 households in Iowa who are eligible
will choose to take the payment. If fewer borrowers take the settlement,
the ones who do participate will receive more money. No one will know
how many Iowans choose to take the settlement until after the October
14 deadline. This means you cannot
wait to find out if it could be higher to decide whether to accept the
settlement. It will be too late if you wait until after October
What do I do if
I want to participate?
If you are eligible, you will
receive a notice and the form you need to sign directly in the mail. These
will be sent around mid- to late August. Your options, and the directions
to follow if you want to participate will be explained in that letter.
(Each letter contains two forms, one for you to sign and return in the
envelope provided, and one for you to keep for your records.)
contact the Attorney General's office for a claim form. If you think you
might be eligible, but have not received a letter, you may contact the
Administrator. Call toll-free 1-888-780-2156, or write to the Administrator
at the address given below, or send e-mail to email@example.com
Who has to sign
the "Release and Agreement to Participate" form?
All borrowers listed at the
top of the page in your letter labeled "Release and Agreement to Participate"
must sign in order to receive payment. If the borrower information listed
on that form is incorrect, please notify the Administrator. (Contact information
is given below).
What happens if
I can't get a signature from my co-borrower?
If you have made every possible
effort to get all co-borrowers to sign, but cannot (as in the case of
the death of a spouse, or in certain divorce or estrangement circumstances),
please do the following:
* Borrowers who are available
and wish to participate should go ahead and sign the form, and also
* Write an explanation on
a separate piece of paper as to why the other borrower cannot sign. (If
you are the guardian of an eligible borrower or the executor of a deceased
eligible borrower's estate, please also include photocopies - not originals
- of your legal appointment papers.)
* Return both your signed
release and the written explanation to the Administrator before
the October 14, 2003, deadline.
The states and Household will
review your explanation, and you will be notified of the decision.
of the letter explaining why the other borrower cannot sign does not mean
that you will automatically get the payment without the other signature,
but it will ensure that your request to participate without all borrowers'
signatures will be considered.
I decide to participate, when can I expect to get my check?
Unless there is an unforeseen
delay, we expect that eligible borrowers who mailed in their
"Release and Agreement to
Participate" before the October 14, 2003, deadline will receive their
checks in mid- or late December 2003. Remember:
Release forms mailed after October 14 will not be accepted.
If I accept the
settlement payment, can I still pursue a court case against Household?
Generally no, but there is
one exception. In order to take the settlement, you will have to sign
a "Release and Agreement to Participate." (That form is included in your
letter. It is the one with your name and the minimum payment information
on it.) The "Release" means that you give up your right to sue Household
or Beneficial, or to take part in a class action, for any claims you might
have about the lending practices which the States investigated. HOWEVER,
even if you take the payment and sign the release, you would still be
able to contest a foreclosure of your Household or Beneficial loan:
you do not give up your right to fight a foreclosure on your Household
or Beneficial loan by signing the release.
You may wish to take the payment
and sign the release, for example, if you do not think you would sue on
your own, or join a class action about these practices. The practices
which are covered by the release are those relating to:
* "split loans" (more than
one mortgage loan made at or near the same time to the same borrowers,
secured by the same real estate)
* loan points ("discount"
or origination fees)
* interest rates
* monthly payment amounts
(including participation in bi-weekly or semi-monthly payment plans)
* credit insurance
* prepayment penalties
* loans offered through a
* home equity lines of credit
* loan billing practices relating
to certain accounting practices
* balloon payments
* payoff information
* non-English language documentation
* the lack of benefits in
connection with a refinancing
You are welcome to consult
with an attorney of your choice to decide if accepting the settlement
payment is right for you. Please remember that if you
decide to participate, the "Release and Agreement to Participate" form
must be mailed to the settlement administrator (in the self-addressed
envelope provided with your letter) before
October 14, 2003. Release forms postmarked after that date will not be
Will there be
any tax consequences as a result of my taking the settlement payment?
You may receive a "1099" tax
form with your check. This does not necessarily mean that your payment
under this settlement is taxable, but it might be. This depends upon a
variety of circumstances. Neither the Administrator nor the Iowa Attorney
General's Office is able to give you tax advice. You should consult your
tax preparer or advisor as soon as possible.
What do I do if
I decide not to participate?
You do not need to do anything
if you do not wish to participate. Do not send in the form, or anything
else, if you do not want to take the payment.
Can I find out
more about the case and the settlement?
here for copies of the Iowa Attorney General's lawsuit petition and
Consent Judgment at the Attorney
General's web site (www.IowaAttorneyGeneral.org.)
If I've misplaced
my release form, can you mail me another copy?
The Attorney General's Office
does not have copies of your release form, or information about the amount
for which you are eligible. Please contact the Settlement Administrator,
by phone, e-mail or letter. The Administrator's contact information is
Where can I get
Visit the Settlement Administrator's
web site at www.household-beneficial-settlement.com.
Call the Administrator toll-free
Send e-mail to firstname.lastname@example.org
P.O. Box 3775
Portland, OR 97208-3775
You may also contact the Iowa Attorney General's office toll-free at 866-519-4636, or by e-mail at:
(But remember, the Iowa Attorney
General does not have specific information about your situation and whether you are eligible, or the
amount you are eligible to receive. Please contact the Administrator for questions
relating to that.)
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