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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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April 18, 2013 at 4:39 pm

Jim please explain how it is a different settlement, I also thought them to be the same.

April 18, 2013 at 4:04 pm

The $840+ checks are a different settlement, you'll get another check in the future for that.

April 18, 2013 at 1:41 pm

Dear Christian:
Christians like you are one of the main reasons I am no longer a Christian.

Have a Blessed Day,

April 18, 2013 at 12:51 pm

Personally, I do not think there should be that many refunds issued. The only people that should be due a refund, are those that were foreclosed on when they were 100% current on there mortgage. Why should anyone else get a refund?
The Banks/Lenders were not obligated to modify your loan or reduce the principal. To many people bought a home for an amount that it flatly was not worth. I myself am included in this statement. I purchased a home for $330,000 which was sold only two years prior for $112,000. I knew the risk of purchasing that house when I bought it.

Susan, you refinanced your home to pull cash out to pay down other debts, which then made your payment above what you could afford. What happened to living within your means?

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? You didn't live up to your side of the deal when you signed your loan documents. If you told me that when you signed your loan doc's, there was a stipulation in there which stated "Lender will modify loan or reduce principal amount in the event of drastic loss of home value" , then I might side with you and blame the bank for the wrongful foreclosure of your home. But until then, in the end, only you are to blame for the foreclosure as you did not make the payments that you agreed too.

And I will apologize because I do not mean to sound like a jerk or someone who does not make mistakes. As I said, I walked away from a home. I did it as a financial decision. I told myself that once my home lost $200,000 in value, I would walk away. I viewed things a little differently then some. I knew if I had a foreclosure, I could not obtain another loan for at least 3 years (FHA) or 7 years (Conventional). Would my house regain the $200,000 in those 3 or 7 years? Maybe... maybe not. But I'm not blaming anyone but myself for my foreclosure. I knew what I was getting into when I first bought the house. We have only ourselves and our human thirst for greed and selfishness to blame.
God Bless you all :)

April 18, 2013 at 11:59 am

after refinancing my home to pay many debts I could not make the payments so I was told I would be forclosed if I didnt catch up.I sold my home so they couldnt forclose.By the time I payed the realitor I ended up with 1300 dollars.What a joke

April 18, 2013 at 11:27 am

Like many of you I went through the "process". Suntrust never offered to modify or in any way alter my loan....they just steam rolled towards foreclosure. Jumped through all their hoops and any other legal efforts to save my house.
Yes, received notice of a check coming to me will never be enough money wise. I'd rather still be in my house...I loved that place. It was "home".

April 18, 2013 at 10:39 am

I haven't gotten my check yet, but I'm curious. The paperwork says the checks will not be less than $840, yet I see people posting here as well as other places on the web about receiving checks for less than that amount. Just another lie on the part of the gov't?

April 18, 2013 at 9:57 am

If the checks bounced--if even one bounced--then the agreement, the deal in which banks and lenders and regulators all agreed there would be no further investigation of their corrupt practices, is "null and void." So, start the long overdue investigation and send some of these suckers to jail.

April 18, 2013 at 8:25 am

i have not recive achech yet they say have not release it i was in started forclourse but stop what will i get please help in georgia.

April 17, 2013 at 9:09 pm

These payments are a Joke! I received a check for $500, with no explanation as to how they came up with that amount. Insult to injury. We tried to Modify for over a year, finally we received a trail modification. Completed the trail period and then our loan was sold to another lender and foreclosed on. Sorry the $500 check does not cut it. Especially when they sold our home for $245,000 less then we owed on it, but yet we could not get a modification lowering the payments or principle?? Big Joke!!!