PRESS RELEASE FOR IMMEDIATE RELEASE October 11, 2002 States Settle With Household Finance (Washington, DC) Mayor Anthony A. Williams announced today that in a landmark settlement, mortgage lender Household Finance has agreed with state and District of Columbia government regulators to change its lending practices. Household also agreed to pay up to $484 million to consumers nationally - including approximately $200,000 to District of Columbia consumers -- for alleged unfair and deceptive lending practices in the "subprime" market. The restitution amount is believed to be the largest ever in a state or federal consumer protection case. Officials from the District's Department of Banking and Financial Institutions (DBFI) and Office of the Corporation Counsel (OCC) worked with the multi-state group on this historic agreement. Regulators alleged that Household violated state and District mortgage, lending and consumer protection laws by misrepresenting loan terms and failing to disclose material information to borrowers. Consumers had complained to authorities that Household charged far higher interest rates than promised, imposed costly prepayment penalties, or misled consumers about insurance policies, resulting in some consumers becoming trapped in costly loans. District of Columbia and state officials said Household cooperated with the investigation once authorities presented their concerns. The company worked with the multi-jurisdiction group over a period of about four months to develop and negotiate solutions to the practices complained of. Government officials said they believe that the agreement-in-principle that was reached will set new standards for the industry. The settlement includes Household Finance Corp., Household Realty Corp., and Beneficial Finance Corp. Officials also said the settlement provides nationwide relief to consumers and addresses practices in the lending industry that have been and will continue to be a priority effort for state and District consumer protection and banking regulators. Banking and financial regulators and assistant attorneys general from the states of Washington, New York and Minnesota did much of the investigative work upon which the settlement is based. The DBFI also identified problems with loans made to District consumers through its investigation of Household loans made in the District. Officials from 19 states and the District of Columbia began coordinating their efforts last spring after they identified a pattern of complaints from borrowers who said they had been misled into agreeing to home loans with far different and much more expensive terms than had been promised. Page 1 of 2      1  2