WASHINGTON (4/22/13)--The Federal Reserve Board late last week assured troubled borrowers whose mortgage settlement checks had bounced that the independent paying agent had fixed the problem.
Some early recipients of checks being sent to borrowers under the Independent Foreclosure Review informed the Fed's consumer helpline on Tuesday that they were told their checks could not be cashed because of insufficient funds.
The Fed said its staff contacted the paying agent, Rust Consulting, Inc., and the paying bank, The Huntington National Bank, and that Rust subsequently corrected problems that led to some checks being rejected.
The Fed said it will continue to monitor the payments closely.
The payments are part of agreements between federal regulators and servicers to provide $3.6 billion in cash payments to borrowers whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the following companies, their affiliates, or subsidiaries: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.
Checks are being sent in waves. The first batch of 1.4 million checks was sent on April 12. The Fed announced Friday that a second wave of 1.4 million checks totaling $1.2 billion was sent, bringing value of checks sent to $2.4 billion.
All checks are expected to be distributed by mid-July 2013.