Problems cashing foreclosure checks resolved

WASHINGTON “ April 18, 2013 “ Some of the mortgage borrowers who received checks this week as part of a $3.6 billion foreclosure-abuse settlement were initially unable to cash the checks, the Federal Reserve said Wednesday. The Fed said, however, that the problem has been resolved.

The paying agent for 13 mortgage servicers, Rust Consulting Inc., corrected problems that led to some checks being rejected, the Fed said in a statement, without offering any details. According to a source with knowledge of the problem, recipients were able to deposit

the checks in their bank accounts, but some ran into trouble when they tried to cash them.

Margaret Jurow, a lawyer with Legal Services of New Jersey who works with homeowners facing foreclosure, said many of her clients don’t even have bank accounts, so cashing the check was their only option.

She called the error incredibly disrespectful to homeowners and former homeowners who were eligible for the checks because they faced foreclosure in 2009 and

2010.

You try sending a bad check to your mortgage company, and see what happens, Jurow said.

Checks began going out on Friday to 4.2 million borrowers after federal regulators reached an agreement with the 13 mortgage servicers.

Borrowers will get checks ranging from $300 to $125,000, for a total of $3.6 billion. The deal involves 13 mortgage servicers: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

The agreement was one in a series of settlements related to foreclosure abuses that included robo-signing, in which mortgage industry representatives signed legal documents without checking them in their rush to evict homeowners.

The largest settlement amount “ $125,000 “ will go to members of the military who lost their homes in violation of the Service Members Civil Relief Act, which gives deployed service members extra protection in foreclosures. Also eligible for $125,000 are homeowners who lost their homes even though they weren’t in default on their loans. But all homeowners who were in some stage of the foreclosure process in 2009 and 2010 with one of the 13 mortgage companies will receive a payment, without having to prove any wrongdoing. More than 64 percent of the borrowers “ about 2.7 million people “ will get $300 or $400, according to the Office of the Comptroller of the Currency.

Copyright © 2013 The Record (Hackensack, N.J.) Distributed by MCT Information Services.

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