HFC SETTLEMENT
Foreclosure Avoidance Program
ACORN and Household International reached a settlement of 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 centerpiece of the settlement is a 72 million dollar Foreclosure
Assistance Program (FAP). Under this program, borrowers who are behind
on their loans because they cannot afford the payments will have their
interest rates reduced enough for their loans to become affordable again.
The interest rate reductions can be as large as 700 basis points. For
some borrowers, including those whose loans weren't affordable when first
made and those who have suffered a major loss of income, the reductions
will be permanent.
"The settlement builds on the agreement reached between the Attorneys
General and Household earlier in 2003. In addition to the FAP, it also
provides relief to borrowers who were not entitled to benefits from the
earlier settlement and it includes additional practice changes that will
protect future borrowers.
It also includes a Fresh Start program for borrowers who have lost their
homes through foreclosure to HFC.
Finally, the resources in the settlement for counseling and financial
literacy will help ACORN expand our work helping borrowers to avoid abusive
loans and to access credit on fair terms. After more than 3 years of
efforts by ACORN members to win changes in Households practices and relief
for borrowers, we are glad to be able to use this new partnership around
the FAP and support for financial literacy to continue working for fair
lending.
Are your debts excessive?
If your monthly debt payments are excessive for your income level (based
on Fannie Mae's qualifying guidelines), this will reduce the amount you
can borrow to buy a house. Use the following chart to see where you stand.
Gross Annual Income |
Allowable Debt Payments |
$20,000 |
$133 |
$25,000 |
$167 |
$30,000 |
$200 |
$35,000 |
$233 |
$40,000 |
$267 |
$45,000 |
$300 |
$50,000 |
$333 |
$55,000 |
$367 |
$60,000 |
$400 |
$65,000 |
$432 |
$70,000 |
$467 |
For every $50 of excess debt, you can expect about a $5,000 reduction
in the amount of mortgage you qualify for. If your debts are excessive,
you should pay off some of your debt as you prepare to buy a house. This
will enable you to qualify for a larger mortgage, which may mean you
can afford a larger home with your income.
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- Foreclosure Avoidance |
Delinquency
Counseling - |
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