Three weeks ago, Rust Consulting issued a series of bad checks to homeowners from the national mortgage settlement. As if that error weren’t bad enough, Rust Consulting just issued a new round of checks that were written for the wrong amounts. In fact, according to a recent article in the New York Times, Rust issued “nearly 100,000 checks for less than the homeowners were owed.” This costly mistake could have cheated homeowners out of millions of dollars.
This recent egregious errors begs the question of whether the mortgage settlement will actually help homeowners at all. If the money isn’t in the bank when the checks are sent, and if the checks are written for less than the owed amounts, what are homeowners really getting out of the settlement?
The terms of the mortgage agreement can be confusing enough on their own without the added problems of disbursement errors. If you have questions about the mortgage settlement or about the funds you may or may not have received, an experienced foreclosure defense attorney can answer your questions today.
Details of the Mortgage Settlement
In an earlier post this month, we mentioned that Rust Consulting is sending out these checks as part of a huge mortgage settlement, which agreed to provide “compensation for foreclosure abuses.” About a dozen banks were part of the original settlement in 2011. By 2012, costs had increased, and the banks reached a new settlement in early 2012. This 2012 settlement required the banks to pay $8.5 billion in cash payments (i.e., the checks that Rust Consulting has been sending) and in mortgage relief.
Major Problems at Rust Consulting?
According to the New York Times, federal regulators forced Rust to fix their mistakes with these recent checks, and a spokesperson from the consulting group indicated that they had “corrected the error” and planned “to mail supplemental checks to affected borrowers as soon as May 17.” It claimed that the mistake had simply been a “clerical error.”
However, it seems that there may be other problems behind the scenes at Rust. In fact, consumers are starting to question the government’s decision to hire the consulting firm to handle the settlement disbursements. The government selected Rust to distribute checks for the cash settlements, which total $3.6 billion. When so much money is involved, has government oversight of Rust been lacking? Or did the government make a mistake when it hired Rust in the first place?
Representatives on Capitol Hill are starting to ask those questions, and they’ve begun investigations into potential problems with the settlement. For example, Representative Elijah E. Cummings from Maryland said that the settlement was the worst one he had ever seen. He has been a leader in investigating the settlement, as well as the government’s decision to use Rust Consulting for disbursement.
Problems Likely to Continue
The first problems occurred when Rust sent the first round of checks in April, for which it “failed to move money into the bank account used for the settlement.” As a result, the homeowners who received the checks were unable to cash them.
In addition, homeowners have also complained that Rust sent checks to the wrong addresses, or that they sent checks issued to deceased borrowers. For example, a California homeowner has been unable to cash her check because it was issued to her deceased husband.
Now, the current problem of issuing checks in the wrong amount is also going to be a difficult one to fix. Of 220,000 Morgan Stanley and Goldman Sachs customers alone, about 96,000 of them received checks for the wrong amount.
And in addition to this problem, homeowners don’t have access to information about how their compensation is being determined, so they can’t know if they’re even receiving the correct amount in many cases. According to Cynthia Singerman, a lawyer with Housing and Economic Rights Advocates, indicated that nearly 2 million people—so far—have had problems with their settlement checks.
If you are experiencing problems with the mortgage settlement or with a disbursement from Rust Consulting, you may be entitled to compensation. Contact an experienced attorney today to discuss your case.
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