Household finance settlement

Some Oklahomans to receive part of Household Finance settlement

About 7,000 Oklahoma consumers will share in up to $8.25 million as part of a $484 million settlement with Household Finance Corp. over unfair and deceptive lending practices, officials announced Friday.

Oklahoma is one of 44 states that formed an agreement with Household Finance settling the states' concerns about the company's lending practices. The District of Columbia also joined in the agreement.

The company also will change its lending practices.

Attorney General Drew Edmondson said the exact number of Oklahomans who may be eligible for restitution is unknown.

"We expect about 7,000 Oklahomans to file claims for restitution," Edmondson said. "This represents the estimated number of Oklahomans who took out real estate loans with Household since 1999, the year we alleged the illegal practices began."

A detailed plan for consumer restitution is being finalized and will be announced at a later date.

The states said Household misrepresented loan terms and failed to disclose material information to borrowers. Household also was accused of charging higher interest rates than promised, charging undisclosed prepayment penalties and deceiving consumers about insurance policies.

The states alleged that some borrowers were led to believe they were paying interest rates between 7 percent and 8 percent when they actually were being charged twice that much.

"Subprime loans are typically packaged for borrowers with less- than-perfect credit," said Donald Hardin, administrator of the Commission on Consumer Credit.

"It seemed Household was trying to take advantage of a bad situation."

Officials said said the company has agreed to change its lending practices, including limiting its prepayment penalties and placing a 5 percent cap on its up-front and origination fees.

"This settlement is the result of a cooperative effort between state attorneys general and state banking and financial regulators," Edmondson said. "I appreciate Household's willingness to address these issues. This settlement is good for consumers and good for the industry."

State banking Commissioner Mick Thompson joined Edmondson in praising the effort.

"We believe this agreement provides a model as to how states can work together in our evolving financial marketplace," said Thompson.