About 16,000 Maryland homeowners will soon get word that they are entitled to share in a $12.8 million settlement between Maryland and Household International Inc., which had been accused of deceptive lending practices.
Marylanders will receive payments ranging from $100 to $12,000, depending on their cases and how many people are parties to the settlement, Attorney General J. Joseph Curran Jr. said yesterday. Curran's office is to send letters to eligible homeowners this week.
Homebuyers who obtained a mortgage loan from Household from January 1999 through September 2002 are among those eligible.
The payments are part of a $484 million settlement that Illinois-based Household reached last year with all 50 states and the District of Columbia. Besides restitution, Household agreed to reform its lending operations.
Household International, through its subsidiaries Household and Beneficial Finance, is one of the largest sub-prime mortgage lenders, catering to those with blemished credit records.
It has been accused of unfair and deceptive mortgage lending practices.
In Maryland, state officials said Household charged excessive points and fees, sometimes didn't disclose the fees or charged prepayment penalties.
In some cases, borrowers were told they had to buy life, disability or real estate insurance to get a mortgage, or were unaware they had bought a policy until they got a bill, Curran said. Household also "flipped" loans, suggesting borrowers refinance newer mortgages even when it didn't benefit the borrower, Curran said.
Concetta Stamm of Essex is expected to be eligible for $1,352 from the settlement. Stamm said she took out a mortgage with Household about 15 years ago, and later took out a personal loan and a second mortgage with the company.
The company falsely accused her of missing payments or being late with them, and would argue with her when she tried to correct the problem, Stamm said. She said she was charged prepayment penalties when she paid off one loan early. Eventually, she complained to the state.
She hasn't decided whether to participate in the settlement, which requires a promise not to take further legal action against Household.
"I believe they owe me more than that for the stress they put me through," she said.
The $484 million settlement is the largest obtained in a consumer protection case by state attorneys general, and shows the effectiveness of states working together, Curran said.
"We are very happy for the consumer. It's a signal to those who would take advantage of someone that sooner or later we will find out and, when we do, we will take corrective action," he said.
Consumers will have until Oct. 14 to send in a claim form from the Household-Beneficial Settlement Administrator. Checks may be sent out by November. For more information, call 1-888-780-2156.