Have you ever received a check from someone, gone to cash it, and had it bounce? It’s frustrating not only to go back and get a new check, but if you cashed the check (rather than deposited) the bank will hold your account liable. This means that your balance goes down as though you took a withdrawal, something that could put you into the negative. Part of the resolution to the mortgage meltdown was a government mandated mortgage relief program. After several years or waiting, the checks finally were issued to distressed homeowners. And many of those checks ended up bouncing.
During the housing crisis many homeowners found themselves to be struggling. In the end they simply could not keep up with their payments and their homes were foreclosed. As it turns out, some of the banks were found to be at fault for providing inappropriate loans in the first place. The result was a settlement paid by the banks to the tune of $3.6 Billion. This was a small consolation to the distressed homeowners, most of whom are no longer in those homes. At least that was the idea of the program.
What actually happened was that the banks did not issue the checks directly to the homeowner. As with many large settlements the banks went through a third party, Rust Consulting, to cut the checks. Rust had the money, but they failed to get it put into the accounts that issued the checks on time. So when people went to cash their checks, they were told that there were insufficient funds to do so.
Now it should be noted that not all homeowners who received checks were affected. And although the Federal Reserve and Rust said they worked hard to fix the problem by Wednesday April 17th, they did not say why it actually happened. Many have speculated that Rust was trying to collect interest on the cash. And not surprisingly either, by moving money from an interest bearing account to the checking account at the last minute the company would be able to collect intra-day interest. With $3.6 Billion in the account, if that interest is only .1% they would earn almost $10,000 per day.
The problem appears to be fixed. As of the evening of April 17th nearly 350,000 people, out of the 1.4 Million people to receive checks, had successfully cashed them.
People dealing with foreclosures are already weary. They have been dealing with this mortgage crisis for more than 5 years now, and they just want a resolution. The mortgage relief check is a small pittance, and when they hurried to the bank they were told they could not cash it. This is a good example of how sometimes a company can get too big for their own good. They get caught up with their bottom line and they forget about the customers. Unfortunately for those who lost their homes, they have taught everyone a valuable lesson. When you are house hunting, take care not to get in over your head with too much house.
Have you gone through a foreclosure? What was the hardest part?