Gov. Holden announces proposed settlement with Household Finance

Missouri officials are reviewing a proposed agreement designed to settle several states' longstanding disputes with lender Household Finance, according to Gov. Bob Holden.

According to information from Holden's office, the action is a culmination of the efforts of several states, which have been negotiating with Household Finance, one of the largest consumer credit lenders in the world, for the past three years. At issue are allegations that Household engaged in unfair, deceptive and predatory lending practices in connection with real estate loans.

"This is a giant step toward resolution of problems which have lingered for years. The state has not decided whether it will opt into the settlement yet, but we think that to do so may be the best resolution for Household Finance's customers in Missouri," Holden said.

Under the terms of the proposal, Household would neither admit nor deny the allegations. On a nationwide basis, Household would hand back as much as $484 million to be distributed to affected consumers. It would be the largest settlement with a consumer credit lender in the history of the United States.

Eric McClure, acting director for the Division of Finance, noted that each state will decide how the money would be returned to its consumers because of the differences in the ways Household does business in various states. Each state's share of the $484 million is to be based on the percentage of total dollars Household lent in a given state. McClure disclosed that Missouri would get approximately $12.6 million.

The deadline for securing enough approvals among the states for the proposal is Dec. 15. If the agreement is approved and it takes effect, the funds would be approved on behalf of Household's customers and would be paid out from January through March 2003.

In addition to the proposed $484 million refund under the agreement, Household Finance also would agree to:

limit prepayment penalties on current and future loans;

ensure that new loans provide a benefit to the borrowers;

strictly limit points and origination fees;

improve disclosures to borrowers; and

change the company's approach on so-called live check loans.