Posted August 8, 2003
Iowa Department of Justice Household (HFC)/Beneficial Settlement-Iowa Customers
Frequently-Asked Questions (FAQs).
What is this settlement about?
This landmark consumer protection settlement addressed concerns that attorneys general and state regulators had about what they believed were unfair and deceptive mortgage lending practices by Household Finance (HFC) and Beneficial Finance. In December 2002 all 50 states and D.C. entered into an agreement with Household. Under the terms of the agreement, Household agreed to change the lending practices in question, and to pay $484 million nationally. Each state got a portion of that based on the amount of loans made by HFC and Beneficial in that state. Iowa's share was $1.49 million.
Which loans are covered by the settlement?
The people who are eligible for a settlement payment are those who got one or more home-secured (mortgage) loans through an HFC or Beneficial Finance branch office between January 1, 1999, and September 30, 2002. Even if you have since paid off such a loan or refinanced it with another lender, you are eligible.
Please note that this settlement does not cover:
- credit card debt, auto loans, or personal loans made by Household or Beneficial;
- mortgage loans which were originally made by a lender other than Household or Beneficial, but were later sold to Household; or
- mortgage loans which were made by a different lender, but are being serviced by Household ("serviced" means Household is collecting the loan for the lender.)
Am I on the list to receive a payment from this settlement?
The Iowa Attorney General's office does not have a list of the customers who are eligible for a payment. A Settlement Administrator is handling the claims, and only the Administrator has the list.
People eligible for the payment will receive a postcard alerting them to be on the lookout for a letter with more details. The letter was scheduled to be sent to eligible borrowers in mid- to late August. With that letter will be a personalized form that will tell you the specific minimum payment amount for which you are eligible.
If I am eligible, how much will my payment be?
There are several factors which determine the amount. Each state developed its own plan for how to distribute the funds. In Iowa, the plan
- gives each borrower-household a minimum of $100, then
- uses a formula that takes into account five factors from each consumer's loan terms: credit insurance "packing," prepayment penalties paid, loan amount, points charged, and the loan-to-value ("LTV") ratio. (The "LTV" ratio means the size of your loan or combined Household/Beneficial loans to the value of your house.)
The minimum payment for the majority of eligible borrowers in Iowa will be $100 -- but the amount could be much more, depending on the other factors.
Why do you talk about the "minimum payment" I would be eligible for? Could the payment be higher than the amount listed in my letter?
It could be higher, depending on how many eligible households choose to take the settlement. These payments will not be sent automatically to every eligible consumer. You have to fill out the form and send it in by October 14, 2003. If you do not, the payment you could have received will go back into the "kitty" and be redistributed to the other eligible borrowers who did sign up.
The minimum payment amount in your letter assumes that all 3531 households in Iowa who are eligible will choose to take the payment. If fewer borrowers take the settlement, the ones who do participate will receive more money. No one will know how many Iowans choose to take the settlement until after the October 14 deadline. This means you cannot wait to find out if it could be higher to decide whether to accept the settlement. It will be too late if you wait until after October 14.
What do I do if I want to participate?
If you are eligible, you will receive a notice and the form you need to sign directly in the mail. These will be sent around mid- to late August. Your options, and the directions to follow if you want to participate will be explained in that letter. (Each letter contains two forms, one for you to sign and return in the envelope provided, and one for you to keep for your records.)
Do not contact the Attorney General's office for a claim form. If you think you might be eligible, but have not received a letter, you may contact the Administrator. Call toll-free 1-888-780-2156, or write to the Administrator at the address given below, or send e-mail to firstname.lastname@example.org
Who has to sign the "Release and Agreement to Participate" form?
All borrowers listed at the top of the page in your letter labeled "Release and Agreement to Participate" must sign in order to receive payment. If the borrower information listed on that form is incorrect, please notify the Administrator. (Contact information is given below).
What happens if I can't get a signature from my co-borrower?
If you have made every possible effort to get all co-borrowers to sign, but cannot (as in the case of the death of a spouse, or in certain divorce or estrangement circumstances), please do the following:
- Borrowers who are available and wish to participate should go ahead and sign the form, and also
- Write an explanation on a separate piece of paper as to why the other borrower cannot sign. (If you are the guardian of an eligible borrower or the executor of a deceased eligible borrower's estate, please also include photocopies - not originals - of your legal appointment papers.)
- Return both your signed release and the written explanation to the Administrator before the October 14, 2003, deadline.
The states and Household will review your explanation, and you will be notified of the decision. Submission of the letter explaining why the other borrower cannot sign does not mean that you will automatically get the payment without the other signature, but it will ensure that your request to participate without all borrowers' signatures will be considered.
If I decide to participate, when can I expect to get my check?
Unless there is an unforeseen delay, we expect that eligible borrowers who mailed in their "Release and Agreement to Participate" before the October 14, 2003, deadline will receive their checks in mid- or late December 2003. Remember: Release forms mailed after October 14 will not be accepted.
If I accept the settlement payment, can I still pursue a court case against Household?
Generally no, but there is one exception. In order to take the settlement, you will have to sign a "Release and Agreement to Participate." (That form is included in your letter. It is the one with your name and the minimum payment information on it.) The "Release" means that you give up your right to sue Household or Beneficial, or to take part in a class action, for any claims you might have about the lending practices which the States investigated. HOWEVER, even if you take the payment and sign the release, you would still be able to contest a foreclosure of your Household or Beneficial loan: you do not give up your right to fight a foreclosure on your Household or Beneficial loan by signing the release.
You may wish to take the payment and sign the release, for example, if you do not think you would sue on your own, or join a class action about these practices. The practices which are covered by the release are those relating to:
- "split loans" (more than one mortgage loan made at or near the same time to the same borrowers, secured by the same real estate)
- loan points ("discount" or origination fees)
- interest rates
- monthly payment amounts (including participation in bi-weekly or semi-monthly payment plans)
- credit insurance
- prepayment penalties
- loans offered through a "live check"
- home equity lines of credit
- loan billing practices relating to certain accounting practices
- balloon payments
- payoff information
- non-English language documentation
- the lack of benefits in connection with a refinancing
You are welcome to consult with an attorney of your choice to decide if accepting the settlement payment is right for you. Please remember that if you decide to participate, the "Release and Agreement to Participate" form must be mailed to the settlement administrator (in the self-addressed envelope provided with your letter) before October 14, 2003. Release forms postmarked after that date will not be accepted.
Will there be any tax consequences as a result of my taking the settlement payment?
You may receive a "1099" tax form with your check. This does not necessarily mean that your payment under this settlement is taxable, but it might be. This depends upon a variety of circumstances. Neither the Administrator nor the Iowa Attorney General's Office is able to give you tax advice. You should consult your tax preparer or advisor as soon as possible.
What do I do if I decide not to participate?
You do not need to do anything if you do not wish to participate. Do not send in the form, or anything else, if you do not want to take the payment.
Can I find out more about the case and the settlement?
Click here for copies of the Iowa Attorney General's lawsuit petition and Consent Judgment at the Attorney General's web site (www.IowaAttorneyGeneral.org.)
If I've misplaced my release form, can you mail me another copy?
The Attorney General's Office does not have copies of your release form, or information about the amount for which you are eligible. Please contact the Settlement Administrator, by phone, e-mail or letter. The Administrator's contact information is given below.
Where can I get more information?
Visit the Settlement Administrator's web site at www.household-beneficial-settlement.com.
Call the Administrator toll-free at 1-888-780-2156.
Send e-mail to email@example.com
Household-Beneficial Settlement Administrator
P.O. Box 3775
Portland, OR 97208-3775
You may also contact the Iowa Attorney General's office toll-free at 866-519-4636, or by e-mail at: firstname.lastname@example.org. (But remember, the Iowa Attorney General does not have specific information about your situation and whether you are eligible, or the amount you are eligible to receive. Please contact the Administrator for questions relating to that.)
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