For immediate release - Monday, December 16, 2002.
Contact Bob Brammer -- 515-281-6699.
Miller: All Fifty States Join Settlement with
Household will pay $484 Million in consumer restitution -- including $1.49 million to Iowa
Following is a statement
of Iowa Attorney General Tom Miller, the lead attorney general in the
nationwide Household working group. He is the Chair of the Subprime Lending
Committee of the National Association of Attorneys General (NAAG.)
Tom Miller statement:
We are very pleased
to announce that all fifty states plus the District of Columbia are entering
formal consent judgments regarding Household Finance. That means the full
restitution amount of $484 million will go to consumers throughout the
country. This is the largest direct restitution amount ever in a state
or federal consumer case. Iowa consumers are entitled to $1.49 million
under the agreement.
The tentative settlement was announced October 11, but the agreement and restitution
amount were contingent on settlement by Dec. 16 with states representing
at least 80% of the dollar volume of Household's real estate-secured loans.
We reached and far surpassed that mark.*
The States also want to emphasize that the settlement will not be affected
by the acquisition of Household Finance announced November 14 by HSBC,
the giant banking and financial services company with headquarters in
London. The settlement and all its terms are binding on any successor
company that might acquire Household's retail branch mortgage lending
We are extremely hopeful that this settlement will signal a new day for protecting
low- and moderate-income borrowers and every consumer involved in the
All-American dream of home-ownership.
I don't believe this will be our last action in this realm. The States are
reviewing the practices of other major companies in the subprime lending
industry, and I expect we will take further action to protect consumers.
This is a landmark decision for Iowa and the nation. We alleged that
Household violated state laws by misrepresenting loan terms and failing
to disclose material information to borrowers. We believe that some consumers
were virtually trapped in expensive loans by some of these practices,
and were unable to refinance elsewhere at reasonable rates.But Household
stepped forward to cooperate and will change those practices -- and we
hope this is the beginning of similar reform by others in this industry.
Restitution terms and arrangements will be determined in the next few months.
A settlement administrator will be named shortly, and information will
be sent to consumers on eligibility and procedures for restitution. Each
state will design its own restitution plan, since some Household lending
practices varied significantly from state to state.
Consumers do not need to call Household or the Attorney General's Office at
this time. There will be notification and public information after determinations
are made on how to allocate restitution.
This settlement strikes a major blow for fairness in the marketplace, especially
for low- and moderate-income Iowans involved in the paramount goal of
home ownership. We were very pleased with Household's cooperation. We
are gratified by what this means for consumers, and we are very optimistic
that this will be viewed as a landmark in improving consumers' treatment
by the subprime lending industry.
[End of Tom Miller statement.]
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* NOTE: Click here for copies of Iowa's Consent
Judgment and its lawsuit, which were
filed simultaneously last Friday in Polk County District Court in Des
Moines. The Iowa documents are substantially the same as documents filed
in all fifty states and DC.
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