Banks began to compensate 4.2 million borrowers last week for past mistakes in processing foreclosures, but a few borrowers say the checks they were sent wouldn’t clear. So far, only a handful of borrowers reported being unable to cash their checks, “but the incident is another embarrassment for federal banking regulators already faulted for prematurely halting [foreclosure reviews] and not securing more money for affected home owners,” The Wall Street Journal reports.
The reimbursement checks stem from a settlement with federal regulators and 13 mortgage servicers, in which 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.
“We apologize to anyone who experienced problems trying to cash their checks,” says James Parks, a Rust Consulting senior vice president. Rust Consulting Inc. is being paid by banks to send checks to the more than 4 million borrowers included in the settlement. “We want to assure the public that checks we have mailed … are valid.”
The Federal Reserve said it would “continue to monitor the payments closely.”
As of Tuesday, more than 207,000 checks amounting to $200 million had been cashed by borrowers so far, according to the Office of the Comptroller of the Currency.
Source: “Loan Pact Hit by Bad Checks,” The Wall Street Journal