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Press Release
Household, ACORN and consumers reach proposed settlement
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CHICAGO -- Household International, Inc., a wholly owned subsidiary of HSBC Holdings plc (NYSE: HBC), the Association of Community Organizations for Reform Now (ACORN), and a series of borrowers from across the United States, announced today they have reached a proposed settlement of nationwide class action litigation relating to the mortgage lending practices of Household's two U.S. branch -based businesses, Household Finance Corporation and Beneficial Corporation.
The core of the proposed settlement is a Foreclosure Avoidance Program (FAP). FAP will provide relief to Household borrowers who are delinquent on their payments and at risk of losing their homes. Components of FAP include:
The amount of relief granted to a borrower will be determined by formula, and will be automatically provided to any Household borrower who meets the eligibility criteria. Initiated on Oct. 1, 2003, FAP has already helped many borrowers like Melvin and Kim Johnson. "It was just too much," Kim Johnson recalls. "We kept falling behind on our other bills trying to keep up with our mortgage. It put a damper on our lives. Then we received a call from ACORN informing us that Household was going to lower our payments under this new program and it was like a burden had been lifted. We're still kind of floating from it." In connection with the proposed settlement, Household has agreed to provide funding over a three-year period for ACORN-sponsored financial counseling and literacy programs. Additionally, the proposed settlement will provide monetary relief to certain borrowers who did not participate in a nationwide settlement announced by state attorneys general last year and will create a good payment rewards program for borrowers who stay current with their monthly mortgage payments. "Those of us who spoke out are gratified that the settlement will help thousands of families stay in their homes," said Maude Hurd, president of ACORN. "Household's performance on implementing the Foreclosure Avoidance Program has been exceptional, and we are hopeful that our future work together will deliver enormous benefits to subprime borrowers." "The proposed settlement reaffirms Household's leadership and commitment to ethical mortgage lending practices," said William F. Aldinger, chairman and chief executive officer, Household International. "We look forward to working closely with ACORN in administering these important programs for consumers, and we commend them on their continued efforts to promote financial literacy throughout the United States." ACORN's case was filed last year in the United States District Court for the Northern District of California, prior to HSBC's acquisition of Household in March 2003. The settlement will become effective only if approved by the court. Class counsel was Sarah Siskind of Miner, Barnhill & Galland, P.C., Madison, Wisc., Niall McCarthy of Cotchett, Pitre, Simon & McCarthy, Burlingame, Calif., Gary Klein, Grant & Roddy, Boston.
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