Household will pay $484 Million in consumer restitution -- including $1.49 million to Iowa Consumers
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 operations.
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.