Over two-thirds of the $3.4 billion in checks issued to borrowers
who were aggrieved by various foreclosure mistakes or inequities had
been cashed as of July 11. The Office of Comptroller of the Currency
(OCC) said Friday that nearly 2.9 million checks totaling over $2.5
billion had cleared the account used for the settlement payments.
This is news primarily because of the history of the settlement
and the payment checks. The settlement occasioning the payout was
reached by OCC and the Federal Reserve with 13 of the largest
servicers late last year. In return for an agreed upon $3.6 million
in cash and other compensation the regulators agreed to halt the Independent Foreclosure Review they had ordered to identify
borrowers harmed by foreclosure related problems. All homeowners who
were in foreclosure in 2009 and 2010 and whose loans were serviced by
one of the 13 are eligible for compensation under the agreement.
First there was much criticism of the settlement amounts which
ranged from $300 to $125,000 depending
on the degree of abuse suffered by borrowers and/or their financial
losses. Many of the borrowers had lost their homes, some in error,
and others had suffered financial loss fighting the foreclosure been
misled or otherwise harmed by the process.
Consulting was hired as the banks' settlement agent. First the firm
was slow to alert borrowers to expect payments then they delayed the
payout for weeks. Borrowers complained of checks sent to the wrong
address or to deceased borrowers. One glitch led to most of the
customers of two banks getting checks for the wrong amounts.
after the first checks were mailed in April borrowers started
reporting that their checks were returned for insufficient funds.
Rust downplayed the incident saying it only affected a handful of
customers and happened because Rust had forgotten to move funds into
the account to cover the checks.
New York Times reported that
a fresh round of nearly 100,000 checks that had gone out from Rust
were written for the wrong amounts. Rust corrected that error and
mailed out checks for the difference in amounts by late May. That
month Representative Elijah E. Cummings (D-MD) called the payout the
"worst settlement I have seen in my life" and opened an
investigation into the problems and the hiring of Rust.
the settlement payout apparently back on track, OCC said that checks
to the remaining borrowers will issued later this summer.