WASHINGTON — The Federal Reserve Board said Wednesday that the independent consultant overseeing payments to millions of consumers as part of its mortgage settlement had fixed problems that had caused troubled borrowers' checks to bounce.
The firm, Rust Consulting Inc., and the paying bank, The Huntington National Bank, began making payments to the 4.2 million borrowers as part of the agreement reached by federal bank regulators and the 13 largest mortgage servicers in January. (According to Rust, 1.4 million payments had been sent.)
However, some consumers were unable to cash or deposit their checks due to insufficient funds.
"Some early recipients of checks informed the Federal Reserve's consumer helpline on Tuesday that they were told their checks could not be cashed," according to the Fed's press release.
Rust has since corrected the problem and verified that $3.6 billion is available to be cashed or deposited.
"We apologize to anyone who experienced problems trying to cash their checks. We are working hard and communicating with the banking regulators, the servicers, and other banks to ensure those issues are not repeated," James Parks, senior vice president of Rust Consulting, in a press release. "We want to assure the public that checks we have mailed under the Independent Foreclosure Review Payment Agreement process are valid."
Checks will be sent in waves. The first batch of 1.4 million checks was sent on April 12. The final wave is expected in mid-July 2013.
To date, more than 50,000 people have already cashed or deposited checks.