The Federal Reserve has announced that 96,000 people who received checks for wrongful foreclosure on their mortgages will also be receiving an additional check. The additional check will compensate homeowners who experienced wrongful foreclosure for an error that was made in the amount of the original checks they received. The initial checks were reportedly issued for amounts that were lower than recipients should have received. The discrepancy was caused by errors that were made by Rust Consulting, the company that distributed the payments.
The new checks will cover the difference between the amounts borrowers erroneously received via the initial checks and the correct amounts they were supposed to have received. The checks were issued as part of a settlement between 13 of the nation’s largest banks and the government. Under the settlement agreement, the banks were to pay $9.3 billion in cash and mortgage balance reductions to borrowers who had already lost their homes or were at risk of foreclosure.
Regulators complained that banks wrongfully foreclosed on homeowners by using abuses like “robo-signing,” which automatically signs off on foreclosures without thoroughly reviewing the documents. The settlement affects borrowers who were in going through the foreclosure process during 2009 and 2010. The Federal Reserve recommended that borrowers with questions contact Rust Consulting.
Foreclosure can be a stressful and confusing process. Unfortunately, with the economic downturn the country has experienced, many people have experienced various stages of the foreclosure process. The good news is homeowners do not have to go through foreclosure alone. Homeowners whose are experiencing prolonged financial difficult that should contact a lawyer who specializes in bankruptcy law. A lawyer may possibly be able to help homeowners understand their options for for addressing their home mortgage and other personal debts.
Source: Huffington Post Business, “Fed Admits Mistakes In Mortgage Settlement”, Martin Crutsinger, May 08, 2013