Picture the following: A Washington state regulatory agency receives a slew of complaints from ordinary citizens claiming that they've been cheated out of their homes or driven into bankruptcy by a Fortune 500 company. The bureaucrats act, compiling a report at taxpayers' expense that extensively documents the predatory and deceptive lending practices of the powerful corporation, the country's second largest home mortgage issuer. But before that document can be released, the company succeeds in suppressing it. And, for good measure, the mortgage powerhouse purchases the services of a former governor who just happens to be the political patron of the current state attorney general, whose office is also investigating the company.

What's wrong with this scenario?

Nothing at all, says Megan Hayden, a spokeswoman for Household International, the lender in question. Yes, Household won a temporary restraining order to bar the release of the April report from the Washington State Department of Financial Institutions (DFI), but problems DFI regulators find ought to be settled in private, she contends; besides, Household has already fixed its problems in Washington--almost all centered at one rogue Bellingham office--and former Governor Booth Gardner is simply helping repair the company's strained relationship with the DFI.

Just about everything, counters Burien resident Julie Herrington. She isn't much of a Household fan, not since company reps convinced her in February 2000 to refinance her home, promising the deal would save her more than $300 a month.

Of course, the loan officers neglected to mention that they weren't including a few costs--like real-estate taxes and homeowner's insurance--in their calculations, costs that meant Herrington's payments would actually substantially increase, she claims. Nor did they stress the $11,000 in fees and closing costs, or the $8,700 penalty they'd slap on if she tried to pay off the loan early. And while they did tell her about the 11.9 percent interest rate--significantly higher than the going market rate, despite her strong credit history--they promised that regular on-time payments would lead to a quick rate reduction, one which never materialized.

Herrington feels duped, and admits she should have been more careful. "I thought I was dealing with a reputable company," the disabled former employee of the Federal Reserve Bank explains, "but refinancing with Household was the worst decision I've ever made in my life."

And she's far from alone. Donald DeBolt, 28, a Federal Way machinist, also refinanced with Household. He's still paying 13 percent on his loan, though he says loan officers assured him his interest rate would drop each year till it hit eight percent. He says Household socked him with huge up-front fees and pre-payment penalties as well, and saddled him with a loan far greater than the value of his house, making it impossible for him to pull out of the usurious deal by finding another lender. Now he's on the verge of filing for bankruptcy.

In fact, Herrington and DeBolt are just two of the hundreds of often needy or low-income Washington borrowers who have complained to authorities after being sucked into Household's orbit. Between January 2000 and April 2002, the attorney general's office has fielded 121 complaints against Household subsidiaries HFC and Beneficial, while the DFI has received over 200 since 1995, more so than for any other lender. Household counters that its own extensive investigation turned up only 42 problem cases nationwide--all now resolved--the "vast majority" of which originated from the company's Bellingham office.

But that doesn't jibe with the DFI's 73-page draft report, suppressed until at least October 4, when a Thurston County judge will consider lifting Household's restraining order. Though The Stranger was unable to acquire a copy, and DFI Director of Consumer Service Mark Thomson admits only that it details Household's "areas of non-compliance," a brief summary in Forbes reveals that it cites 92 complaints statewide, most from branches other than Bellingham. Those deal mostly with deceptive statements from loan officers about interest rates, as well as the company's pattern of sometimes sticking borrowers with a second loan, sold as a revolving line of credit, with rates well above 20 percent. "Sales tactics intended to mislead" are widespread, the report allegedly concludes.

Meanwhile, Household, which has been aggressively expanding its sub-prime lending since 1998, has reaped the benefits, posting 16 consecutive record quarters, with net income passing the $500 million mark in the second quarter this year.

Increasingly, however, desperate borrowers are finding ways to strike back at the company they believe cheated them. Many have joined ACORN, an advocacy group for middle- and low-income people that has launched a nationwide campaign against predatory lending practices, and which sued Household earlier this year in California. "Injustices have been done and crimes committed," asserts Seattle-based ACORN organizer Jenny Lawson, who says Household's problems extend far beyond any single branch office. "Our bottom line is that we want justice for borrowers."

In addition, Wenatchee attorney Bob Parlette filed suit in May against Household on behalf of six customers. Since then he claims to have heard from around 120 others, and has moved to have the suit take on class-action status. "I'm hearing horrible stories from all over the state," he says. "People's lives have been ruined."

As for the attorney general's investigation (distinct from that of the DFI), Household's hiring of Booth Gardner--who gave current Attorney General Christine Gregoire her first major state post in 1988--as a consultant may already be bearing fruit; Household's Hayden confirms the company is in ongoing "productive discussions" with regulators. Not that Household expects to be refunding large sums on top of the $392,000 the company has already refunded in Washington. The discussions are primarily about improving lines of communication and repairing relationships: "I don't know of any discussions about a settlement," she contends.

However, State Senator Karen Keiser, a leading crusader in Olympia against predatory lending, says she has heard that Household is on the verge of reaching a settlement with state regulators, and she expects any such agreement would include a significant level of "compensation and forgiveness of terms." She adds, "The terms a lot of these people have been pushed into are insupportable."