The New York Times recently reported that when homeowners went to cash checks coming from the National Mortgage Settlement, the checks bounced – yes bounced.
Ronnie Edward, whose home was sold in a foreclosure auction, apparently waited three years for his $3,000 check. When it arrived, he went to his local bank in Tennessee, only to learn that the funds “were not available.” Mr. Edward was taken aback. “Is this for real?” he asked.
The Times further reports that "it is 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 checks. 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 first round of the settlement checks was mailed last week. In recent days, problems arose at Rust Consulting, a firm chosen to distribute the checks, people briefed on the matter said. After collecting the $3.6 billion from the banks, these people said, Rust failed to move the money into a central account at Huntington National Bank in Ohio, the bank that issued the checks to homeowners."
"Banking regulators, frustrated with missteps at Rust, urged the consulting firm to shore up the account Tuesday. Now, regulators say the problems are resolved, and are urging homeowners to try again. Officials worry that homeowners, weary from a process that has stretched on for years, will give up."
“We apologize to anyone who experienced problems trying to cash their checks,” a senior vice president at Rust, James Parks, said in a statement. “We are working hard and communicating with the banking regulators, the servicers, and other banks to ensure those issues are not repeated.”
This obviously will not engender much hope or trust in a system that has been mired in controversy since the housing crash that started to implode in late 2007.