Local

Bankruptcy, foreclosure follows high interest loans

First published April 22, 2002:

Since a story about a homeowners' lawsuit against Household Finance Corp. appeared in the April 5 issue of The Bellingham Herald, the owners of 19 other Whatcom County homes have stepped forward with similar allegations of misleading sales pitches from representatives at the firm's Bellingham office in Sunset Square.

The homeowners contend that the sales pitches led them to take on first and second mortgages with interest rates much higher than they had been led to expect. They also contend they were rushed to sign voluminous paperwork that committed them to fees and insurance costs amounting to thousands of dollars, plus prepayment penalties that made it nearly impossible to refinance.

Some of the homeowners have declared bankruptcy. A few are awaiting foreclosure on their homes.

Others say that Household representatives agreed to reductions in their interest rates after they complained or threatened legal action.

Household Finance Corp. is a subsidiary of Household International, a nationwide lender that reported record first-quarter net income of $511 million this year and ranks 147th on the Fortune 500 list of the nation's largest corporations.

Household International portrays itself as a leader in protecting its customers against abuses. At corporate headquarters in Prospect Heights, Ill., company spokeswoman Megan Hayden said that if the abuses described by the Whatcom County homeowners did occur, they were violations of the company's policies.

"It is absolutely against our policy to in any way quote a rate that is different than what the true rate is," Hayden said. "I can't underscore that enough."

She predicted that the company would be checking out the Whatcom County complaints and would take "strong measures" if they proved valid. She declined to be more specific.

Local HFC representatives have not responded to requests for comment.

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