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Foreclosure checks bounce

By Holden Lewis ·
Wednesday, April 17, 2013
Posted: 12 pm ET

Some of the foreclosure checks bounced.

A bunch of big banks agreed to a $3.6 billion legal settlement a few months ago to halt a review of improper foreclosures. Under the settlement, checks will be sent to more than 4 million homeowners who lost their homes to foreclosure in 2009 and 2010.

The first wave of checks was sent Friday. And, according to the Federal Reserve, at least some of them bounced. The Fed phrased it this way: "Some early recipients of checks informed the Federal Reserve's consumer helpline on Tuesday that they were told their checks could not be cashed."

The Fed says the problem has been solved.

Screwing up for fun and profit

This is the latest episode in a long tragicomedy in which banks, regulators and consultants rival the Keystone Cops in ineptitude. Those banks, regulators and consultants have excelled at only one thing: protecting one another. Meanwhile, borrowers are abused repeatedly.

The biggest abuse came in the form of improper foreclosures, in which banks' law firms fabricated and robosigned documents. Then the regulators "got tough," if by "got tough" you mean, "Let the banks choose the consultants who would review paperwork to identify abuses, then let the consultants dawdle and delay."

This is what happens when regulations to protect consumers are considered a nuisance or an inconvenience to banks. That's the political culture we inhabit, and this is what we get.

'Sorry about losing your house. Here's a small check.'

After lining the pockets of the "independent consultants" with $2 billion for not doing much, the regulators and banks said the process of identifying lender wrongdoing was too slow and expensive. So regulators and banks cooked up the foreclosure settlement, in which former homeowners will be paid between $300 and $125,000, whether or not they were foreclosed on improperly.

Would you expect the checks to be sent by the banks or by a government agency? If so, you don't think like a bureaucrat. The checks come from a company called Rust Consulting Inc. So if you get a letter from Rust Consulting, don't throw it away unopened. It might contain a valid check.

At least they got the phone number right

According to the Fed, the bouncing checks show Rust Consulting as the paying agent, drawn on an account at The Huntington National Bank. After borrowers called the Fed's complaint line Tuesday, "Rust subsequently corrected problems that led to some checks being rejected," according to the Fed.

The Fed says it "encourages borrowers who have concerns or experience difficulties cashing their checks to call Rust at (888) 952-9105."

Yes, I checked the number to make sure the Fed didn't give out the wrong one.

Do us all a favor, please

I have a request for people who have received checks from Rust Consulting. Could you please take a picture of the envelope and email it to me? Cover up your address first. I want to post a picture of the envelope, so folks will know what to watch out for.

Update: Thanks, everyone! Several people sent me images of their envelopes. I appreciate it. Here's what the envelope for the foreclosure settlement check looks like.

Follow me on Twitter @HoldenL.

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February 13, 2014 at 12:01 pm


February 03, 2014 at 8:34 pm

Long monday. Got home. Read mail. Guess what I got? A letter with a copy of a 1099-misc from fund 2 blah blah blah Paying Agent RUST CONSULTING INC. Goes on to say that I received a payment of XXXX in 2013, it was being reported to the IRS, and that I would need when I file my taxes for 2013. ONE PROBLEM? I NEVER RECEIVED A DIME AT ANY TIME FROM ANYONE regarding my foreclosure. Tried the 1-888 number DURING BUSINESS (BANKERS) Hours! No Luck, just good bye and disconnect after listening to ALL the messages. Now I'm sending a cert. letter to Rust and to the state attorney general regarding this matter.

January 29, 2014 at 4:07 pm

well i live in mn and as of 1/29/2014 i have not got a check from rust. got the postcard saying to look for check by end of the mo.called and they dont have any infor. then who do i call to find out.

Gilliam M.Cobbs
January 23, 2014 at 7:48 pm

Rust Consulting Company, Mortgage Settlement Division.In my view/experience this is one of the most incompetent companies I know. One never gets to talk to the same person twice. The wait time is obscene. Called at least 13 times(not counting no contact ones)for the same claim,and sent documents several times for the same request. Obamacare tie-ups/mix-ups pale in comparison to this settlement pay out firm's lack of customer concerns,

Dale Byrd
December 11, 2013 at 11:12 am

I didn't get a check from any one. Ifs in the mail never gotten yet what happen. Thank You GMCA for F my family life up...????
from the Byrd family from Cal

September 25, 2013 at 10:42 pm

was out of town- check null n void after 90 days-requested reissue sept 3rd told 4-6 weeks.leaving usa oct 10th because i cant afford living here called,asked them to expedite-NO WAY I BEEN TOLD MANY TIMES - LIKE TALKING TO ROCKS AND NOBODY CARES= ANYBODY KNOWS HOW TO GET THE CHECK FASTER ?? EMAIL

May 07, 2013 at 12:22 am

I am a little leary of this, I received one of these checks and honestly thought it was a BS scam of somekind I have the check and the enevelope is this really for real is there some way or someone who I could call and confirm it with? I dont have the money to replace my check and I dont want to deposit and have them have my info and then something happen. Please let me know, I am just unsure about it but could use the small amount that was issued to me. Thank you for the advise

April 18, 2013 at 5:32 pm

David, I do not recall at any point in my thread in which I stated I was a Christian. That being said, if you stopped being a Christian because of people like myself, well then, you were not really strong in your beliefs in the first place. Whatever path you chose to go, I hope the best for you :)

Holden Lewis,
From the view of "how much" money the Bank stands to lose, yes, it would make "business" sense to modify someone's mortgage and by $100,000 to make the home affordable and keep the owner in it. The point I was trying to get across is that SOOO many people feel the Bank is"obligated" to modify their loan. The Bank doesn't have to do anything that wasn't otherwise stated in the original loan documents.

That's why.....

Holden Lewis
April 18, 2013 at 5:21 pm


The question you ask is important: "Terri, the bank sold your home and took a loss of $245,000 which we all know they just make up in some other way. Why should they modify your loan or lower the principal?"

I would answer this way: What if the bank modified that loan and forgave $100,000 in principal? And what if Terri had gotten that modification and made her payments on time? In that case, the bank would lose $100,00 instead of $245,000.

That's why.