Bumbling Contractor Causes Problems for 2 Million Homeowners Receiving Foreclosure Compensation Checks

Sunday, May 12, 2013

The company hired by federal regulators to issue compensation payments for 4.2 million homeowners wronged during the foreclosure crisis has twice bungled the task.


First, Rust Consulting, which has 50 contracts with the federal government, sent out checks to homeowners that bounced.


Now, the firm has come under fire for cutting checks with the wrong amounts. At least 100,000 checks were issued for amounts less than what homeowners were owed, potentially cheating them out of millions of dollars.


In response to criticism from officials in Washington, Rust said it had corrected the clerical error that caused the problem and planned to mail supplemental checks to affected borrowers as soon as May 17.


Still, this means that half of the Americans scheduled to receive compensation checks will have encountered delays or other problems cashing their checks.


“This is the worst settlement I have seen in my life,” Representative Elijah E. Cummings (D-Maryland), who has opened an investigation into problems with the settlement, including the use of Rust, told The New York Times.

-Noel Brinkerhoff


To Learn More:

Errors Afflict More Checks Issued to Aid Homeowners (by Ben Protess and Jessica Silver-Greenberg, New York Times)

More Foreclosure Settlement Fiascoes: Rust Consulting Underpays Some Harmed Borrowers (by Yves Smith, Naked Capitalism)

Most Homeowners Compensated for Bank Foreclosure Misdeeds will Receive just $300 (by Noel Brinkerhoff, AllGov)



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