Banks Pay for Mortgage Abuse—With Rubber Checks

Company handling settlement didn't deposit money with the bank
By Kevin Spak,  Newser Staff
Posted Apr 18, 2013 7:27 AM CDT
Banks Pay for Mortgage Abuse—With Rubber Checks
It's unclear how many checks have bounced.   (Shutterstock)

It took years for homeowners to get even the relatively small checks afforded them in a $3.6 billion settlement with some of the country's biggest banks over mortgage abuses—and when they finally arrived this week, many of them promptly bounced, the New York Times reports. "Is this for real?" asked one former homeowner, who waited three years for his $3,000 check, only to be told that funds "were not available."

The company handling the settlement, Rust Consulting, collected the $3.6 billion from the banks, but apparently neglected to actually deposit it with the bank issuing the checks. Some officials say Rust has a habit of hanging onto money, in what some believe is an attempt to earn interest on it. The company doesn't know how many bounced—it's only aware of 12 incidents—but only 50,000 of the 1.4 million checks have been successfully deposited. (More mortgage stories.)

Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.