Lender, activists reach $100 million settlement

Household International and ACORN set up plan for struggling borrowers

November 30, 2003|By Christian Murray | Christian Murray,NEWSDAY

A large subprime lender that borrowers claimed engaged in predatory lending tactics entered into a settlement last week with its borrowers and a large community-rights group.

Household International Inc., a subsidiary of HSBC Holding based in Prospect Park, Ill., announced a proposed settlement with a series of borrowers and the Association of Community Organizations for Reform Now (ACORN), a community activist group that filed the suit on behalf of the borrowers in October of last year.

The settlement is worth about $100 million, of which $72 million will be channeled to a foreclosure avoidance program. The company did not admit wrongdoing.

The foreclosure avoidance program, which began Oct. 1, is administered by ACORN and Household. Its purpose is to help Household borrowers who are at least 60 days late on their mortgage payments.

Angela Staron, an ACORN spokeswoman in Chicago, said there are 35,000 borrowers who are 60 days late, with 200 joining those ranks on a daily basis.

Staron said the settlement means that Household will pay an additional $28 million to be spent on loan counseling and paying some borrowers' claims. The terms of the settlement are awaiting the approval of U.S. District Court, Northern District of California.

The settlement comes a little over a year after a number of attorneys general across the country, including New York's Eliot Spitzer, settled with Household for $484 million concerning similar complaints.

Mark Friedlander, a spokesman for Household, said, "We are pleased to have reached a settlement, and this reaffirms our commitment to ethical mortgage lending practices."

Newsday is a Tribune Publishing newspaper.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.