In October 2002, the State of Ohio reached a settlement with Household and Beneficial Finance over their alleged improper mortgage lending practices. More than 43,600 Ohioans are eligible to receive the State of Ohio’s portion of approximately $31.8 million dollars.

Household Settlement Funds Distribution Process Begins

In October 2002, the State of Ohio reached a settlement with Household and Beneficial Finance over their alleged improper mortgage lending practices. As part of this settlement, the State of Ohio received approximately $31.8 million dollars to distribute to harmed consumer/borrowers who had taken out or refinanced mortgage loans between January 1, 1999 and September 30, 2002.

The State of Ohio is having the Household-Beneficial Settlement Administrator contact over 43,600 eligible consumers in Ohio informing them of their right to participate in this settlement distribution. Those wishing to participate are required to sign and return the legal release form provided to them by the Household-Beneficial Settlement Administrator.

Under the Ohio distribution plan, all eligible consumers will receive a minimum of $200. It is anticipated that the money will be sent out in December 2003.

A website has been established by the Settlement Administrator at www.household-beneficial-settlement.com to aid consumers in understanding the settlement and to provide answers to frequently asked questions regarding settlement participation. A toll-free number has also been established by the Administrator to assist in handling consumer inquiries. This number is 1-888-780-2156.

Consumers can get more information about the settlement claims process for Ohioans from the Ohio Attorney General's website www.ag.state.oh.us

Ohio Household Restitution Protocol

Summary: Ohio has determined individual consumer restitution amounts by dividing 50% of its restitution pool using a “proportionality calculation” and dividing the other 50% using a “harms calculation” with a $200 minimum restitution amount for each eligible participating consumer.

Consumers will have the first of the two parts of their total restitution amount calculated by giving them the same percentage of $15.9 million as the percentage their individual loans constitute of the total of all eligible Ohio loans.

The second part of the two parts of a consumer’s total restitution amount is calculated by assigning each consumer a “harms score” based upon whether or not the consumer’s individual loan transaction contained excessive closing costs; a paid prepayment penalty; a “loan-to-value” in excess of 100% (this means the amount owed on the loan is more than the value of the house); insurance premiums financed as a part of the loan; a semi-monthly, bi-weekly or weekly loan repayment plan; and/or a personal home loan (PHL) entered into within 90 days of a related real estate loan.

I. Introduction: The Ohio Household Restitution Protocol seeks to fairly and logically divide Ohio’s $31.8 million restitution pool between 43,620 eligible Ohio consumers impacted by the business practices of Household in connection with both real estate (RE) and personal home loans (PHL). Calculating individualized harm for the eligible Ohio consumers is not possible as not all such consumers suffered all types of harm and specific dollar figures cannot be obtained for certain types of harm suffered. In light of these limitations, this restitution protocol will determine individual consumer restitution amounts by adding together refund amounts reached by dividing 50% of the restitution pool using a “proportionality calculation” and dividing the other 50% using a “harms calculation” with a $200 minimum restitution amount for each eligible participating consumer.

II. Proportionality Calculation: Each eligible Ohio Household customer will have the first of the two parts of their total restitution amount calculated by giving them the same percentage of $15.9 million (50% of the restitution pool) as the percentage their individual loans constitute of the total of all loans. The use of a proportionality calculation is premised upon the belief that each Ohio Household consumer in the covered time period suffered some economic injury and that not all such injuries can be captured or quantified based upon the information available to us. The best available substitute in our opinion is a proportionality calculation. Under this formula, for example, a consumer with a $100,000 loan, with the total of all loans being $2.1 billion, would be entitled to a proportional refund of $757.14, [(100,000 divided by 2,100,000,000) multiplied by $15,900,000]. This proportional refund amount would then be added to the “harms refund calculation” amount to reach a total restitution amount.

III. Harms Calculation: Each eligible Ohio Household consumer will have the second part of the two parts of their total restitution amount calculated by assigning each consumer a “harms score” based upon whether or not the consumer’s individual loan transaction contained the following: excessive closing costs (points); an excessive paid prepayment penalty (PPP); a “loan-to-value” (LTV) in excess of 100% (the amount owed on the loan is more than the appraised value of the house); a single premium life, disability, or credit insurance (insurance) policy rolled into the loan; a semi-monthly, bi-weekly or weekly loan repayment plan (EZ Pay); and/or a personal home loan (PHL) entered into within 90 days of the primary real estate loan (this PHL is also referred to as a side loan).

News Release on Household Settlement

FOR IMMEDIATE RELEASE

AUGUST 11, 2003

LT. GOVERNOR JENNETTE BRADLEY AND ATTORNEY GENERAL JIM PETRO

ANNOUNCE HOUSEHOLD FINANCE SETTLEMENT PROCESS

43,254 Ohioans Eligible To Participate In $31.8 Million Settlement

Ohio Lt. Governor and Commerce Director Jennette Bradley joined Attorney General Jim Petro today to announce that $31.8 million will be forwarded to thousands of Ohio consumers who have had home loans with Household or Beneficial Finance. The consumers will soon receive information regarding the settlement payment process.

The settlement resolved an investigation by the states into allegations of unfair and deceptive mortgage lending practices by Household International through its subsidiaries Household and Beneficial Finance. The states alleged that Household had overcharged borrowers with fees and interest, and had misled borrowers about other loan terms such as prepayment penalties and credit insurance. Under the landmark settlement, which was finalized in December 2002, Household agreed to pay $484 million dollars to the states to be distributed to eligible Household borrowers. Ohio’s portion of the settlement is $31.8 million.

“The Department of Commerce’s Division of Financial Institutions worked diligently with the Attorney General’s Office to craft a settlement agreement that corrects lending abuses and provides relief to Ohio borrowers who were victims of Household’s lending practices,” Lt. Governor Bradley said.

"I'm proud of the State’s attorneys for helping to modify the business practices of one of the largest sub-prime lenders in the country. This settlement requires the company to improve their practices to better serve customers," said Attorney General Jim Petro.

Under the settlement distribution plan, all Household borrowers in Ohio who obtained a mortgage loan directly from Household from January 1999 through September 2002 are eligible, the Attorney General said. Claim payments for Ohio borrowers will range from a minimum of $200 to more than $5,200. Individual payments will depend on the amount of the consumer’s loan and certain factors present in the loan.

The settlement administrator, Poorman-Douglass, mailed a postcard on Friday, August 8 to 43,254 Ohio borrowers to notify them of their eligibility to share in the State’s $31.8 million settlement with Household International. The postcard informs the borrower that they will soon be receiving a cover letter and a settlement form, which should arrive next week. Consumers who wish to participate in the settlement will have to complete and return the form to the settlement administrator by October 14. Attorney General Petro said the administrator will pay consumers by check before the end of the year.

As part of the settlement, Household also agreed to implement a series of reforms in its lending operations. Court injunctions in place in all 50 states restrict prepayment penalties on current and future home loans, prohibit loan “flipping,” limit up-front points and origination fees, and improve loan disclosures.

After receiving the cover letter and settlement form, Household mortgage loan customers who have questions about the settlement payment procedures can contact the settlement administrator by calling a toll-free number, 1-888-780-2156. The settlement administrator’s website address is www.household-beneficial-settlement.com.

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Household-Beneficial Settlement

Frequently Asked Questions

1) What is the purpose of this settlement?

To provide partial reimbursement to borrowers who may have been overcharged by Household Finance or Beneficial Finance in connection with certain real estate loans. The covered loan transactions include real estate secured loans and Personal Homeowner Loans originated through one of the Household/Beneficial retail lending branches during the period January 1, 1999 through September 30, 2002.

2) Why am I being directed to contact the Settlement Administrator instead of the Attorney General’s office or Ohio Department of Commerce?

The Settlement Administrator is a company experienced at handling the distribution of large settlement funds like this one. The notices and releases sent to you by the Settlement Administrator have been written and/or approved by the state. The settlement agreement requires Household to pay the Ohio expenses of sending out all the notices and checks. There is a confidentiality agreement that prohibits the Settlement Administrator from sharing any of your private information.

3) What makes a consumer eligible to participate?

To participate in the Ohio settlement you must have obtained a loan on property in Ohio from Household International, Inc., Household Finance Corporation, Beneficial Corporation, or one of their subsidiaries or affiliates between January 1, 1999 and September 30, 2002.

4) I have not received my Release packet but I think I may be eligible to participate.

The Settlement Administrator will be mailing Release packets to eligible Ohio consumers on August 15, 2003. If you have not received a Notice Letter and Release by August 30, 2003 please contact the Settlement Administrator by telephone, at 1-888-780-2156, or e-mail, at www.household-beneficial-settlement.com and request they check the eligible consumer list for your name. Be prepared to state your loan date, amount and other loan identifying information.

5) Why did I receive more than one notice letter and release, each with a different loan number?

In Ohio over one thousand eligible consumers had more than one eligible loan with Household or Beneficial. In some cases consumers entered into one loan by themselves and had a second eligible loan that they entered into with another person as co-borrowers. To participate in the settlement the proper Release Form must be signed by the borrower(s) who signed for the original loan. For example, if you obtained a loan in 1999 on your own and then obtained another loan in 2001 with your spouse, only you would sign the Release Form for the 1999 loan—but both you and your spouse would have to sign the Release Form for the 2001 loan.

6) What do I need to do to participate in the settlement?

Borrowers who are eligible to participate will receive a joint letter and release form from the Ohio Attorney General and Ohio Department of Commerce that will explain what the borrowers should do to qualify for restitution.

7) What is the deadline to return my signed Release Form?

The deadline to file a release form in this settlement is October 14, 2003. However, we urge that those wishing to participate return the release form as soon possible after deciding to take part in the settlement, as this will speed up the final distribution. If for any reason the Release Form is defective the Settlement Administrator will contact you. You will have 30 days after October 14, 2003 to correct the form.

8) What do I do if I don’t want to participate in the settlement?

Simply do not return the Release Form. If you do not return a signed release form, you will be excluded from receiving any restitution. Nothing else is required. However, you may receive some reminder notices of the Release Form deadline date, as we want to be sure that anyone who does not return a signed Release Form did so by choice and not mistake.

9) How much restitution money will I get if I participate in the settlement?

The minimum amount of restitution you will receive if you sign and return the Release Form is listed on the Release Form itself. If that space is blank you must call the Settlement Administrator at 1-888-780-2156. Your actual restitution amount you receive may be more than the minimum amount listed on the Release Form as any money not claimed by other eligible consumers will be divided up among those consumers who do chose to participate.

10) How was the restitution amount on my release form calculated?

In Ohio the restitution amount has been calculated based upon the amount of your eligible loan(s) and whether or not your loan contains certain terms or you were charged excessive fees in connection with getting the loan(s).

11) Can you give me advice on whether I should sign the Release?

No, neither the Ohio Attorney General’s Office nor the Ohio Department of Commerce can give you legal advice or make this decision for you. We encourage you to consult with a private attorney if you want legal advice about participating.

12) How can I get another copy of the Notice Letter and Release Form?

Contact the Settlement Administrator by calling 1-888-780-2156 or going to their website, www.household-beneficial-settlement.com to request another Release packet. After receiving your telephone or e-mail request the Settlement Administrator will check to make sure you were part of the first mailing and an eligible Ohio consumer before sending you a second Notice Letter and Release Form.

13) Can I take the signed Release form to my Household (or Beneficial) Branch Office or State Official’s Office?

No, the signed Release form must be returned to the Settlement Administrator at:

Household-Beneficial Settlement Administrator

PO Box 3775

Portland, Oregon 97208-3775

14) Can I fax my Release form to my Household (or Beneficial) Branch Office or State Official’s Office?

No, the Settlement Administrator must receive an original signature; therefore you have to return the form by mail.

15) How can I confirm that the Settlement Administrator has received my Release Form?

You may contact the Settlement Administrator at 1-888-780-2156 or the Settlement Administrator’s website, www.household-beneficial-settlement.com to check on the status of your Release form. Once you reach the website, there is an option to contact the Administrator via email. The Settlement Administrator will receive your email and respond as quickly as possible (by email or phone). Please wait at least one week from the time you return your Release before contacting the Settlement Administrator.

16) When will I receive my restitution?

If you want to receive restitution, you must return a signed release form by October 14, 2003. It will take a few months for all the Release Forms to be processed and the restitution calculations to be finalized. Barring any unforeseen delays, the restitution payments should be mailed by the end of December 2003.

17) Will my personal loan information be kept confidential?

Yes, the Settlement Administrator has a confidentiality agreement with Household Finance that will protect the privacy of all information provided to them by you or by the state of Ohio. This information will be used for the administrative purposes of this settlement only and will be returned to Household at the close of the restitution program

18) I have moved. What if I think I’m eligible but have not received my letter from the administrator?

Send a letter stating both your old and new address to:

Household-Beneficial Settlement Administrator

PO Box 3775

Portland, Oregon 97208-3775

Please provide your full name, former address and any other kind of identifying information such as a loan account number, social security number, etc. They will then update your address in the system for future mailings. If you don’t receive the Notice Letter and Release Form by the end of August, please call the Administrator’s toll free line at 1-888-780-2156.

19) What is the total settlement fund?

The national settlement was $484 million divided among the 50 states and the District of Columbia. Each state was given a portion of this total settlement fund based on loan volume to reimburse consumers in their states. Ohio received approximately $31.8 million.

20) What will the average payment be to eligible Ohio consumers?

Provided that all eligible consumers participate in the settlement, the average payment to Ohio consumers will be $731.42. The minimum payment will be $200 and the maximum payment will be $5,271.42. The payments will be larger if all eligible consumers do not participate in the settlement.

21) If my loan had a co-borrower do we both need to sign the Release Form?

Yes, all borrowers identified on the original loan must sign the Release Form in order for the form to be valid. Restitution payment will not be made to just one of the co-borrowers without the other person also signing the Release Form.

22) I had a co-borrower but cannot get a signature (due to divorce, separation, etc.), what are my options?

If you’ve made every effort to obtain the co-borrower’s signature, you can sign and send in the release form with a letter attached explaining the circumstances as to why the co-borrower signature cannot be completed. An appeals process is set up to deal with these situations and make a decision.

23) I am the guardian or executor to the estate of (claimant name) and he/she was sent a Release Form for this settlement. How can the form be completed?

Sign and date a letter explaining the circumstances and attach that along with any other legal documentation showing you as the guardian or executor to the estate of (claimant name) to the release form and return. We will set up the restitution to be sent to “The Estate of (claimant name).” Please also include any address changes as to where the restitution should be sent.

24) How does the Household notice already sent to me about pre-payment penalties affect my loan?

Many Household/Beneficial loans to Ohio consumers required consumers to pay a prepayment penalty if the loan was paid off in full during the first five (5) years. Ohio’s settlement agreement with Household requires that Household not impose a prepayment penalty against any borrower if the borrower pays off the loan after 2 years from the date the loan was obtained. This means Household can charge a prepayment penalty if you pay the loan off within two years but not after that. The Household notice was sent to inform you that you will not have to pay a prepayment penalty if you pay off a loan that you have had for longer than 2 years regardless of what your loan paperwork states.

25) I have already paid off my Household (or Beneficial) real estate secured loan. Am I still included in this Settlement?

Yes, customers whose loans have already been paid off are eligible to participate in the Settlement provided that the loans were real estate secured loans (i.e. mortgage loans or home equity loans) from a Household or Beneficial retail-lending branch that were entered into between January 1, 1999 and September 30, 2002. This includes loans that were opened during this time period regardless of whether or not the loan is currently open or closed.

26) My real estate secured loan is open and I’m still making payments to Household (or Beneficial). Am I still included in this Settlement?

Yes, customers whose loans are still open may be eligible to participate in the Settlement provided that the loans were real estate secured loans (i.e. mortgage loans or home equity loans) received from Household or Beneficial that were entered into between January 1, 1999 through September 30, 2002. This includes loans that were opened during this time period regardless of whether or not the loan is currently open or closed.

27) If I sign this Release from, does this mean that I can stop making payments on my loan?

No, this Settlement does not affect the status of your loan or release you from any payment obligation for any open loan with Household or Beneficial. You must continue to make your loan payments in accordance with the terms of the loan agreement.

28) What if my home is in foreclosure or has gone through foreclosure?

If you receive a Release form, you are eligible to receive a payment under the Settlement. However, participating in the Settlement and receiving a payment will NOT stop or undo a foreclosure. If you choose to participate in the Settlement, you must sign and return the Release form. In doing so, you give up various legal rights (listed on the Release form), but you do not give up your right to raise any rights and defenses in a foreclosure action. You are strongly encouraged to contact a private attorney about your situation before making a decision about participation.

29) Do I have to pay taxes on the settlement payment I will be receiving?

Some consumers may receive a 1099 form with their settlement payment. However, whether any payment that you receive under this settlement is taxable will depend on several factors. Because of this, we are not able to give any individual tax advice. If you have tax questions, you should contact a local tax preparer or advisor.

30) What if I have a complaint about a loan from Household or Beneficial that is not covered by this settlement or involves a loan made by someone else but is now held Household or Beneficial?