Settlement Proves Predatory Lending Is a Problem
By: Source: AARP.org Date Posted: 2003-09-11 11:04:00-04:00
The Ohio Attorney General and a coalition of other state attorneys general recently reached a settlement with Household Finance addressing alleged deceptive mortgage lending practices. Under the settlement, affected Ohio consumers may receive up to $30 million.
The settlement impacts more than 20,000 Ohioans who received real estate loans from Household Finance Corp and its affiliates, Beneficial Finance Corp., and Household Realty Corp, since 1999. Ohioans who want details of the process by which consumers can apply for restitution from this settlement can call the Ohio Attorney General's Household Hotline at (614) 995-2256.
The complaint against Household alleged lending abuses such as failing to inform consumers of their loan costs and fees, including the cost of insurance premiums, and misrepresenting loan terms. As part of the settlement, Household has agreed to limit prepayment penalties to the first two years of a loan, ensure that refinancing actually provides a net benefit to consumers, and to limit up-front points and origination fees to 5%.
"While this landmark settlement may prevent future Household customers from taking out a home equity loan that they can't afford, it does nothing for the Ohioans who are being foreclosed against or who already lost their homes due to similar practices," according to AARP Ohio Government Affairs Representative Ron Bridges, who serves on an Ohio General Assembly committee that is studying predatory mortgage lending practices.
"Plus, this settlement only applies to Household," Bridges said. "It doesn't stop other lenders from charging onerous rates or excessive up-front points and fees or insurance premiums. This is just one subprime lender whose practices affected more than 20,000 Ohioans over three years. Surely these facts will convince our lawmakers that they must act in January to protect Ohioans from these predatory practices, and not wait for a committee report in June to tell them there is a problem."
If you want to join the effort to fight fraudulent and abusive lending practices in Ohio, join our network of citizen advocates. You will receive regular editions of AARP Ohio's Capitol News and all e-alerts dealing with financial security issues as they arise.
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