By Richard Burnett of The Orlando Sentinel
With the filing deadline fast approaching, thousands of mortgage customers in Florida have yet to claim their share of a $23 million predatory-lending settlement with finance giant Household International, Inc., state officials say.
So far, barely half of the 42,228 eligible customers in Florida have filed claims to share in the state’s portion of a record nationwide settlement, the Attorney General’s Office said Thursday. A last-minute rush is expected as the Oct. 14 filing deadline approaches.
Last October, Illinois-based Household agreed to pay $484 million to settle allegations it gouged customers with unethically high interest rates, hidden fees, deceptive sales tactics, and other predatory practices. Authorities accused Household Finance Corp. and its sister company, Beneficial Finance, of victimizing 300,000 customers.
Household officials denied violating any laws and described the alleged abuses as isolated cases in a large, multibillion-dollar consumer-finance operation. It did agree, however, to make certain changes in its procedures, including shortening its prepayment-penalty periods and capping its up-front fees.
The case against Household has become the largest consumer-lending enforcement action in U.S. history. Only four states have a bigger share of the total settlement than Florida, where Household has 62 offices, including 10 in Orlando.
If all eligible Florida customers file a claim, the average payment would be about $545. Payments are expected to range from as little as $100 to more than $2,000, depending on the loan amount and to what extent the loan terms were considered abusive.
“We’ve seen at least one man who had 11 loans with Household, so obviously the potential compensation would be more,” said Mary Ann Clark, an assistant attorney general in the civil rights division. “We wanted to ensure every victim receives something, so we set a minimum payment, but there is no cap.”
Officials hope to send out restitution checks by the end of the year, Clark said. They also hope word gets out about the pending deadline and that more people respond. Final notices to customers are mailed this past Monday.
Nationally, the response rate has been a little better than Florida’s, said Sandra Kane, an assistant attorney general in Arizona and representative of the National Association of Attorneys General, which brought the predatory-lending claims against Household International.
About 63 percent of those notified across the country have replied so far, she said.
Customers seeking more information may call 1-888-780-2156, send an email to [email protected], or write to Household-Beneficial Settlement Administrator, P.O. Box 3775, Portland, OR, 97208-3775.
The Household settlement has not stopped the filing of private lawsuits and other complaints about the company’s lending practices. Lawyers involved with those suits criticized the government-negotiated settlement as inadequate.
“It is too little too late for most of Household’s borrowers,” said Tom Methvin, a lawyer in Montgomery, Ala., who represents a number of plaintiffs suing Household and other major lenders. “Families have lost and are near losing their homes to foreclosure. That settlement won’t help much to buy a new one.”