The bank foreclosure settlement that was intended to speed relief to homeowners is having some problems. Probably not a surprise to those already screwed over by the Big Banks.
On Tuesday, some of the first people to receive payouts under the $9.2 billion deal between federal regulators and the mortgage industry called into a government hotline to report that their bank would not cash their check, the Federal Reserve announced in a press release. Though the unspecified problem was eventually resolved, the Federal Reserve noted, the episode is likely to further erode confidence in a program that has failed to deliver on almost every promise made by federal regulators.
From the press release:
The paying agent for checks being sent to borrowers under the Independent Foreclosure Review has assured the Federal Reserve Board that early problems with some checks have been corrected and that funds are available to cash all checks.
Some early recipients of checks informed the Federal Reserve's consumer helpline on Tuesday that they were told their checks could not be cashed. Members of the Board staff contacted the paying agent, Rust Consulting, Inc., and the paying bank, The Huntington National Bank. Rust subsequently corrected problems that led to some checks being rejected.
The Board will continue to monitor the payments closely and encourages borrowers who have concerns or experience difficulties cashing their checks to call Rust at 1-888-952-9105.
As previously announced, on April 12, payments began to 4.2 million borrowers following an agreement reached by federal bank regulatory agencies and 13 mortgage servicers. More than 50,000 people have already cashed or deposited checks.
Earlier this month, the Government Accountability Office (GAO) issued a scathing report on the review process, finding that regulators did not provide proper oversight and that some errors likely went undetected.Regulators also recently released new information suggesting that banks may have made errors in as many as 30 percent of all loans that qualified for a review, a figure far higher than previously reported.
And of course, the regulators did not escape the wrath of Senator Elizabeth Warren.
Warren embarrassed the poor regulators during a Senate Banking Committee hearing last Thursday morning as she demanded to know why they won’t reveal how frequently big banks illegally foreclosed on homeowners, only to be told that information about bank's illegal activities is "proprietary" and may not ever be disclosed.