Household Finance Mails Refunds

Household International Inc. began mailing $92.4 million in refund checks to Californians on Tuesday as part of the company’s settlement of a predatory lending case with state regulators nationwide.

The checks, averaging $1,424.46, will go to 64,868 Californians participating in the settlement. That’s about 78% of all eligible Household customers in California. The remainder who did not participate still can sue Household, a Prospect Heights, Ill., company that operates under the names Household Finance and Beneficial and is a unit of London-based HSBC Holdings.

The reimbursement will cover about 19% of borrowers’ loan origination fees, prepayment penalties and unrefunded credit insurance premiums.

Most of the checks were to be mailed Tuesday, but some will be sent Dec. 31, the California attorney general’s office said.

The October 2002 settlement with the subprime lender was reached with attorneys general or other regulators in all 50 states. They alleged Household and its affiliates had misrepresented loan terms, deceived borrowers about credit insurance, charged exorbitant origination fees and imposed excessive penalties on customers who paid off their loans early.

Under the settlement, Household agreed to impose no prepayment penalty more than two years into a loan, limit origination fees to 5% of the principal and tell customers that credit insurance is optional.