HSBC Watch News Release Forum Index
Forum Name: - Mortgages
Topic Title: Why People Call Household Predatory
Sun Jan 16, 2005 12:33 am
I accepted unsolicited loan checks from Household in 1996 for $5300, when I was a single mom with 2 kids and made $15,000 a year (gross) as a pizza delivery driver. As there were no disclosures, I did not realize I now had a revolving loan at 26% interest.
I have paid them $7000 in interest so far, and the principal has never gone down. In 2002 I was actually advised by a Household representative that the only way they would lower my interest rate was if I quit making payments. After making no payments for 3 months, Household called me and offered to rewrite my loan as "closed" and at 7.99% interest, and also loan me an additional $200.
Like a fool, I accepted this offer and went to the local branch as directed to have the loan rewritten this way. After I realized what was going on, that I had paid them $7000 already that now meant nothing, because I had a brand new loan with them for the original amount all over again, I refused to pay them any more.
Household then began court proceedings to obtain a judgement against me, because, as one of their collection agents told me on the phone, they had checked my credit report and saw that I was paying all my other creditors on time so apparently I had the money. They now used this new, valid contract with them (with all proper disclosures, etc.) to claim I have not paid on this loan. I recently lost the case in arbitration, with their award being for $5192.
Every attorney I talk to says they cannot help me--I signed a contract, even if I was tricked into it. So now I will end up paying Household over $12,000 for the $5300 they loaned me. To add insult to injury, I received a small check last year as a plaintiff in the class action against Household for the credit insurance I was apparently charged for but did not know about. By not opting out of the class action, attorneys have also informed me that the original loan from 1996 has been "settled" and I have no claim.
Thank you for letting me share my story to hopefully prevent others from being duped like I was.
Sun Jan 16, 2005 1:01 am
Since 1996 volunteers at Household - HSBC Watch received reports from consumers and had personal experiences with HFC. Let there be no doubt that the consumer report entitled "Why People Call Household Predatory" is very common and has an appropriate title.
Before unwitting visitors are quick to say "you signed the contract" or "read everything before you sign it" here is what we know regarding the HFC closing process:
The actual interest rate and type of interest is not disclosed if possible.
Closing takes place at HFC's office, with one HFC officer and the people who sign the contract.
After the customer exits the closing booth or office, and before they leave the HFC office area, HFC reps make verbal statements to the customer in front of other office employees. Said employees are witnesses.
The contract is already signed before the customer is told that the payment amount quoted will not pay off the loan.
For customers that called companies other than HFC, i.e. shopped for the lowest payment, HFC's payment is always lower but won't pay off the loan.
The HFC closer tells the customer that the payment needs to be higher, usually after the contract is signed, but they do not tell the customer that the rate is daily interest.
Some HFC offices don't even bother to tell the customer that they need to pay more each month in order to pay off the loan in the quoted number of years.
If you do not pay off the loan in the number of years agreed, the balance is due in full. They usually offer to finance it again.
When HFC drops the interest, after the contract is past due, all interest is compounded daily and added to the back end of the loan along with late fees and other fees.
When daily interest accrues, unless you go to the office to pay your statement on the day you receive it in the mail, another 10 to 15 days of interest has already been added before your payment is processed.
Interest accrues on the days between when the statement was printed and when you get it in the mail, so the balance shown is lower than what you owe the minute you open the envelope.
An HFC second mortgage is not a real estate loan, but is more like a revolving credit card loan. Watch out.
Beneficial Finance loans are just a bad.
HSBC Finance Corporation loans are just as bad.
Given all the above, you can see where an HFC loan will usually have a balance after 5 or 10 years that is just as high as it was on the day you got the loan.
There is a difference between a professional sub-prime lender and a predatory lender. HFC and HSBC Finance Corporation is a predator, a poor choice for financing, and State Attorney Generals across the country use the term "troubled predatory lender" as do we.
We monitor customer trends for possible violations of Regulation Z and other possible illegal actions.