First wave of mortgage relief checks bounce
In our last post, we discussed the fact that this week, thousands of borrowers in Georgia and around the country who were victims of bank misconduct would be receiving checks from the banks to compensate them. The checks ranged from $300 to potentially over $100,000 and were poised to be a welcome relief or at least a consolation for homeowners who suffered at the hands of big banks.
And then the checks bounced. Yes, checks written from the nation’s largest banks to borrowers who had been wrongfully foreclosed upon could not be deposited for lack of sufficient funds.
For many who had been on the other side the equation before, the irony of a bank unable to make an on time payment was a little too much. One activist told reporters “It’s the perfect ending for such a debacle.”
A borrower who lost his home in foreclosure and then waited three years for a payment from the bank to correct the mistake was unable to cash his $3,000 this week. He hurried to his bank when the check arrived and was told that the funds were unavailable.
The problem was apparently with a consulting firm that acted as the middleman between the banks and the people receiving the checks. The firm said that the $3.6 billion needed to cover the checks that were sent out was not immediately transferred to the account from which the checks were written.
It is not immediately clear how many of the 1.4 million checks sent out this week bounced. As of Tuesday only 50,000 checks had been cashed, leaving 1.3 million that people either did not attempt to cash or that they were unable to cash. According to regulators the problem should be resolved, so settlement recipients should be able to receive the funds.
Source: New York Times, “Mortgage Relief Checks Go Out, Only to Bounce,” Jessica Silver-Greenberg and Ben Protess, April 17, 2013.
Information about the rights of people who are going through foreclosure can be found on our Atlanta bankruptcy site.