April 24, 2018

Foreclosure Settlement Marred by Bad Checks

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Foreclosure Settlement Marred by Bad Checks

About 96,000 borrowers will receive an additional check to correct errors made in initial payments sent to compensate them for foreclosure mishandlings. The payments are part of a nationwide settlement. Some borrowers were issued amounts that were too low, the Federal Reserve announced, and the new checks will make up the difference. 

Borrowers should cash the original check along with the new check when they receive it. The new checks will be mailed by the end of the week. 

The Federal Reserve announced last week that about 96,000 of the 217,000 checks had wrong amounts mailed to Goldman Sachs and Morgan Stanley borrowers.

Rust Consulting is the company handling the payments. When the payments were first issued in April, many borrowers said the checks they received wouldn’t clear. At the time, the incident sparked an apology from the company for those who had problems trying to cash their checks. 

The Federal Reserve vowed to closely monitor the payments going forward. 

The reimbursement checks stem from a settlement with federal regulators and 13 mortgage servicers. The servicers agreed to provide $3.6 billion in cash payouts to eligible borrowers who were foreclosed on in 2009 and 2010. About 4.2 million home owners who underwent foreclosure in 2009 and 2010 may be eligible to receive payments ranging from $300 to $125,000 as part of the settlement.

Source: “Fed Admits Mistakes in Mortgage Settlement,” The Associated Press (May 9, 2013)

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