The nation's largest subprime lender, Household International, has agreed to pay as much as $484 million to settle lawsuits filed by a coalition of state attorneys general and financial regulators. It's the largest consumer protection settlement ever -- more than twice as large as the Federal Trade Commission's $215 million settlement with CitiGroup last month.

Officials from 19 states and the District of Columbia accused Household of cheating its customers by overcharging them for home equity and other loans. Because the monthly payments were higher than consumers expected, many lost their homes.

"We apologize to our customers for not always living up to their expectations," said William Aldinger, chairman and CEO of Household in a prepared statement.

Household has also agreed to several reforms, including the elimination of prepayment penalties for borrows who keep their loan for at least two years. In the past, customers who paid off their loans in less than three years were hit with large prepayment penalties.

Florida Attorney General Bob Butterworth said Household's targeting of low-income homeowners particularly affected racial minorities and the elderly, whose homes are often their only assets.

"We want to change the way this industry does business," Butterworth said. Florida began investigating Household, after Madie Bell Wilson, 89, was evicted from her Miami home last year. She had taken out a $27,000 home-equity loan, thinking it was a home repair grant that did not have to be paid back.

Wilson does not read or write well and said she had no idea she had taken out a loan. Household eventually forgave her loan but the case piqued Florida officials' interests and helped lead to the multi-state settlement reached today.

Investigators said they found many consumers who said Household charged interest rates that were much higher than they had been promised and that they also wound up paying costly "points" and other loan fees, as well as staggering prepayment penalties.

Settlements vary from state to state. In Florida, about 15,000 consumers will receive an average settlement of $1,544 each.

Consumer advocates applauded the states' actions but the housing activist group ACORN echoed what many said privately. The settlements are "puny" compared to the damage Household has done to consumers, the group said.

ACORN is not just hurling verbal brickbats. It has filed class action suits against Household in California, Massachusetts and Illinois (story). That cases have yet to make their way through the courts. Also, AARP sued Household last yuear on behalf of an elderly Rochester couple who were in danger of losing their home.

Household recently agreed to refund $586,278 to 3,100 borrowers in Washington state after a routine state audit found problems with loans issued to homeowners.

On Jan. 10, Household agreed to pay $12 million to settle California regulators' allegations that Household deliberately overcharged tens of thousands of customers. On April 23, the 7th U.S. Circuit Court of Appeals in Chicago reversed a $25 million settlement of a class-action suit against Household and H&R; Block. The decision removed a legal shield that had protected Household and Block from allegations they illegally gouged customers by providing "refund anticipation loans" at interest rates frequently exceeding 100 percent. Household and Block could face damages of up to $2 billion in Texas alone, the appeals court said.

Household is the parent company of the Household and Beneficial finance companies. Companies included in the settlements are Household Finance Corp., Beneficial Finance Corp. and Household Realty Corp. The company had net income last year of $1.9 billion.

Subprime lenders write loans to people with credit problems or low incomes. They defend their higher interest rates and fees by saying the risks of writing such loans are greater. "Predatory" lending is generally defined as charging consumers high interst rates, excessive points, fees and prepayment penalties, often while requiring expensive credit insurance.