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The following in an expose'

Court documents alleged that the following abusive practices took place from 1999 through 2002. State attorneys general and state financial regulators from across the United States received complaints about Household International and subsidiaries HFC - Household Finance - and Beneficial Finance.

The truth is, as millions of customers can testify, these practices took place as early as 1994. This is the legacy of William F. Aldinger, homewrecker and predatory lender, and head of Household International.

Earlier court documents show that California attempted to stop such abuse but Household International ignored California authorities and, in fact, told subsidiary Beneficial Finance to adopt such abusive practices as part of Household's profit building model.

What follows is a training manual on how to bleed America from within through omission and duplicity. All the while thinking they would pay the fine if Household International was charged, the tactics outlined in this article brought billions in profit to Household International, millions in salary and benefits for William F. Aldinger, and misery to millions of Americans.

A. Two real-estate secured loans made at or near the same date to the same consumer (“split loans”, or “loan-splitting”): Plaintiffs allege that such loans were made through unfair and deceptive means, including, but not limited to, misrepresentations or omissions concerning the number of loans, misrepresentation of the benefits of refinancing and debt consolidation with the high-cost split loans; use of the second loan as a result of the high amount of points and fees financed as part of the primary loan; and as a means to make high loan-to-value mortgage loans which had the effect of preventing borrowers from seeking to refinance with lower rate lenders.

B. Loan points and origination fees: Plaintiffs allege that Defendant failed to provide timely and adequate information to borrowers concerning the amount and purpose of the putative (define) “discount” or “buy-down” points and fees imposed on their loans, including, but not limited to, failing to provide meaningful early disclosures as required by law, 24 C.F.R. 3500.7.

C. Misrepresentation of interest rates: Plaintiffs allege that Defendant misrepresented the interest rates to be charged on loans through such means as using a “low-ball” rate purporting to be an “effective” rate or an equally deceptive term. Such misrepresentations and omissions occurred in the context of Defendant’s attempting to disguise a high-rate mortgage as a low-rate mortgage through use of (for payment of an additional fee) a bi-weekly payment plan. Defendant failed to inform consumers that accelerated principal reduction occurred through making extra payments, instead misleading consumers into thinking the savings were attributable to lower interest charges than the loans provided for. Additionally, misleading comparisons were made between rates on existing debts which applicants were considering refinancing or consolidating, and the rate(s) to be charged on Defendant’s proposed loan or loans.

D. Monthly payment amounts: Plaintiffs allege that Defendant failed to inform consumers that higher payments, rather than lower rates, were the feature of the bi-weekly payment program which would result in overall savings in finance charges. Further, in making sales presentations with respect to refinancing and debt consolidation applications, Defendant made misleading comparisons of monthly payment obligations between existing debts and the proposed new loan or loans to be made by Defendant.

E. Single premium credit and other insurance product: Plaintiffs allege that Defendant engaged in a pattern of “insurance packing,” including, but not limited to, misleading consumers as to the voluntary nature of the insurance, the price of the insurance, and the benefits and/or term of the insurance.

F. Prepayment penalties: Plaintiffs allege that Defendant engaged in a practice of misleading consumers about the presence of prepayment penalties on their loans, and imposed prepayment penalties in violation of state law.

G. Unsolicited loans offered through an unsolicited negotiable check that the consumer can accept by endorsing and depositing or transferring the check (“live checks”): Plaintiffs allege that Defendant used “live checks” as a “bait” to make high-cost mortgage loans; used misleading representations; and failed to adequately inform consumers that the unsolicited check was a loan.

H. Practices with regard to home equity lines of credit: Plaintiffs allege that Defendant extended what was in substance closed-end credit disguised as open-end credit with the intent to avoid making meaningful disclosures concerning the payment terms, such as the existence of large balloon payments. Plaintiffs further allege that Defendant extended what was in substance closed-end credit with APRs in excess of 10% over the US treasury rate for comparable maturities, which Defendant disguised as open-end credit to evade the requirements of the Home Ownership and Equity Protection Act, 15 U.S.C. § 1639.

I. Loan billing practices relating to simple interest calculations: Plaintiffs allege that Defendant’s practices by which payments were credited to accounts on the basis of the number of days between payments frequently resulted in situations in which scheduled payments were insufficient to pay accrued interest, creating a shortfall in interest (“interest short”), which resulted in excess finance charge costs for borrowers. Such shortfalls could occur even when payments were not late. Defendant further made representations concerning the opportunity to “skip a payment” without informing consumers that doing so would result in “interest short” situations. Defendant failed to provide borrowers with material information necessary to avoid such extra charges.

J. Balloon payments: Plaintiffs allege that Defendant extended credit to borrowers on terms that would eventually require balloon payments, without disclosing to borrowers the existence or amount of the balloon payments.

K. Payoff information: Plaintiffs allege that Defendant failed to provide timely payoff information, which impeded borrowers’ efforts to seek refinancing elsewhere.

L. Non English language documentation: Plaintiffs allege that Defendant engaged in unfair and deceptive practices by failing to provide meaningful descriptions of loan terms to non-English-speaking borrowers.

M. Net tangible benefit in loan refinancing: Plaintiffs allege that Defendant engaged in the practice of refinancing its own or other loans, thereby imposing additional fees and costs, where the new loan provided no net tangible benefit to the consumer.

The fine did come, and Household International paid a mere $484 million (USD) at a time when Aldinger had another plan. Sell the company to HSBC Bank plc when the stock price was at its lowest in years while asking for $34 million (USD) in compensation to manage the transition, Aldinger thought.

HSBC Bank plc, more than eager to export the same abusive model to countries such as India and Brazil, took the bait. Thus a new predator emerged, fully aware of the damage that was done and could be done in the future across the globe.

Intelligent minds suggest HSBC, using the Household Model, could and does use duplicity in their credit card processing business. Why not? Again, simply pay the fine when they get caught. But this time the stakes are higher. HSBC has deep pockets and a huge fine will not put them out of business. Reputational risk aside, HSBC reaps huge profits every day. In 2006, however, consumer advocates at Household - HSBC Watch will assist attorneys and regulators with trend analysis which proves that Household International and HSBC established a pattern of abuse endorsed by William Aldinger and sold to HSBC as part of the Household International buyout. There will no room for denial or negotiation.

Training sessions, staff meetings, manuals, and employee testimony such as the sealed testimony of Melissa Rutland Drury show how Household implimented and marketed predatory lending through acts of omission and commission. Later James Shea (re: Shea v Household) exposed duplicity in HSBC and Household International's credit card operations. HSBC owned Household for almost two years of this alleged period, 1994 through 2004, and again overseen by William F. Aldinger. Thus you know the secrets of HSBC Bank plc that they don't want you to know. You know what they bought, how little they changed, and how they plan to use the same tactics in other countries. Does HSBC Bank plc sacrifice reputation for profit?

Did Sir John Bond retire before HSBC got a black eye and a label as "global predatory lender"? We expose the truth so you can decide.

This is just one of our articles referencing HSBC complaints about mortgages, Bestbuy, credit cards, auto loans, fees, and late payment processing.

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HSBC Watch monitors HSBC customer trends for possible violations of Regulation Z and other possible illegal actions. We use your individual HSBC complaints and merchant complaint reports to perform trend analysis. We are not associated with HSBC, Household International, or their merchants. Some items are used by permission granted in the Fair Use guidelines of the 1976 U.S. Copyright Act. HSBC Watch was formerly known as Household Watch is now part of the Lender Watch network


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