Wednesday, March 4, 2015

Unclaimed Foreclosure Settlement Checks and Reissues

You might remember hearing about a foreclosure settlement that resulted in numerous Americans receiving settlement checks. From fraudulent lending practices to problematic involvement in foreclosure proceedings, many banks agreed to settle.
However, according to a recent article in, it looks like a surprisingly high number of settlement recipients haven’t cashed their checks. As such, Rust Consulting, the paying agent for the settlement, will be “mailing the checks this week to borrowers who are eligible under the payments agreements and have not yet cashed or deposited their check.”
History of the Independent Foreclosure Payment Agreements
Are you trying to remember how the foreclosure settlements came about? Back in January of 2013, federal bank regulatory agencies and twelve different mortgage servicers came to agreements about responsibility for consumer losses. We know those agreements as the Independent Foreclosure Review Payment Agreements.
Specifically, according to the Comptroller of the Currency (OCC), the mortgage servicers involved in those agreements “to provide cash payments totaling $3.6 billion to borrowers with a mortgage serviced by one of these servicers, their affiliations, or subsidiaries whose homes were in any state of foreclosure during 209 and 2010. The mortgage servicers involved in the agreements include: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.
After federal regulators and the servicers reached a settlement, Rust Consulting began mailing out checks “to nearly all of the 4.2 million eligible borrowers.” Payments for each homeowner varied, depending on specific losses. All in all, the checks ranged anywhere from “several hundred dollars to $125,000 plus lost equity.”
Consumers Aren’t Cashing Their Settlement Checks
Rust Consulting initially mailed out those checks as early as April 2013. By January of 2015, approximately 87 percent of the eligible borrowers had cashed their checks, totaling about $3.1 billion. However, that leaves a relatively large number of consumers that haven’t yet gotten their settlement money. To be sure, 600,000 checks remain outstanding, and those checks have since expired. In other words, even if a borrower planned to make a deposit, the check is no longer valid.
Given that so many people haven’t obtained the settlement funds to which they’re entitled, Rust Consulting “has been directed to conduct additional services for update[ing] addresses as part of an ongoing effort to reach the in-scope borrowers.” The consulting company’s current attempts to reach those consumers will represent the third time that Rust has reached out to those who haven’t cashed their checks.
When borrowers receive a settlement check, they must cash or deposit it within 30 days. For borrowers who haven’t cashed checks related to the later settlement with GMAC Mortgage and EverBank, replacement checks will soon be on their way. Rust Consulting will mail those in May of 2015 to borrowers who failed to cash or deposit the original check.
Why wouldn’t someone cash a settlement check? It just may be that nationwide trust in mortgage servicers is a bit bleaker than we’d like to think. If you have concerns about whether you’ve been treated fairly as a consumer, you should speak with an experienced Oak Park consumer protection lawyer about your rights.
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