Home owners in the US are experiencing a nasty shock when trying to cash long-awaited cheques from banks that forced them into mortgagee sales, according to the New York Times.
Last week, struggling borrowers across the country lined up to take their cut of a US$3.6 billion settlement with the nation’s largest banks — lenders accused of wrongful evictions and other abuses – only to have their cheques bounce.
Ronnie Edward, whose home was sold in a ‘foreclosure’ auction, waited three years for his $3,000 cheque. When it arrived last Tuesday, he raced to his local bank in Tennessee, only to learn that the funds ‘were not available’.
Edward was taken aback. “Is this for real?” he asked.
It’s unclear how many of the 1.4 million homeowners who were mailed the first round of payments covered under the foreclosure settlement have had problems with their cheques. But housing advocates from California to New York and even regulators say that in recent days, frustrated homeowners have bombarded them with complaints and questions.
The mishap is just the latest setback to troubled borrowers in the US. It took more than two years to resolve a federal investigation into the mortgagee sale abuses. Even after the settlement in January, the cheques were delayed for weeks.
“It’s the perfect ending for such a debacle,” says Michael Redman, a paralegal who runs 4closurefraud.org, a web site for victims of foreclosure abuse. He says he received 15 emails on Tuesday alone from homeowners whose cheques bounced.
The first round of the settlement cheques were mailed last week. In recent days, problems arose at Rust Consulting, a firm chosen to distribute them. After collecting the $3.6 billion from the banks, Rust reportedly failed to move the money into a central account at Huntington National Bank in Ohio, the bank that issued the cheques to homeowners.
Many banks, after spotting a phone number for Huntington on the back of the cheques and confirming the legitimacy of the money, agreed to process the payments. But some credit unions, cheque cashers and community banks apparently looked only at the account number on the unfamiliar-looking cheques and ultimately found a zero balance.