Victims Of Foreclosure Fraud Can’t Cash Reimbursement Checks

— by Sarah Edelman, Guest Blogger on Apr 17, 2013 at 3:48 pm

Could federal regulators and their cast of private contractors possibly do a worse job of getting relief to families who were wronged during the foreclosure crisis?

First, private contractors botched their initial review of banks’ foreclosure files. Then, the Office of the Comptroller of the Currency cut a bad deal with mortgage servicers that pays very little – about two-thirds of borrowers will receive only $300.

Finally, adding insult to injury, borrowers are having trouble cashing the disappointingly small checks!

Apparently, in order for borrowers to cash the compensation checks they received, their bank must contact Rust Consulting, the company handling the distribution of compensation funds for the U.S. government in order to verify the checks are cashing. However, when these banks followed typical protocol and contacted the bank issuing the checks, Huntington National Bank, the issuing bank was unable to verify and give approval to cash the check.

In the grand scheme of things, this bureaucratic slip-up can be resolved fairly easily, and the Federal Reserve has assured the public that borrowers should be able to access their compensation going forward. However, this most recent debacle underscores how this entire process has failed millions of families who have already lost their homes and savings during the foreclosure crisis.

A major problem throughout this process has been poor communication and outreach to borrowers. Last summer, the General Accountability Office reprimanded the OCC for ineffective outreach to more than 4 million borrowers who could be eligible for compensation. What’s more, the closed review process by the bank contractors – for which reviewers were paid more per hour than most borrowers will end up getting in total compensation – offered borrowers no opportunity to provide additional information as the contractors were determining whether or not they were wronged and if so, the amount of compensation they were owed.

As that review process became increasingly costly and bogged down, the OCC made a deal with 13 banks which, yet again, provides little meaningful redress to the vast majority of those whose foreclosure were mishandled.

Perhaps it could be amusing – or even inspire a comedy TV show – if a small-town sheriff was bungling its affairs this badly. But it’s no laughing matter when the primary federal regulator of big-bank safety and soundness and its high-priced contractors look like the Bad News Bears.

Our guest blogger is Sarah Edelman, a Policy Analyst at the Center for American Progress Action Fund.


This material [the article above] was created by the Center for American Progress Action Fund. It was created for the Progress Report, the daily e-mail publication of the Center for American Progress Action Fund. Click here to subscribe.

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Letter from former-Representative Alan Grayson

FOR IMMEDIATE RELEASE
October 10, 2011
Alan Grayson

The Government Accountability Office (GAO) says that our Government has handed out $16 trillion to the banks.

Let me repeat that, in case you didn’t hear me the first time. The GAO says that our Government HAS HANDED OUT $16 TRILLION TO THE BANKS.

That little gem appears on Page 131 of GAO Report No. GAO-11-696. A report issued two months ago. A report that somehow seems to have eluded the attention of virtually every network, every major newspaper, and every news show.

How much is $16 trillion? That is an amount equal to more than $50,000 for every man, woman and child in America. That’s more than every penny that every American earns in a year. That’s an amount equal to almost a third of our national net worth — the value of every home, car, personal belonging, business, bank account, stock, bond, piece of land, book, tree, chandelier, and everything else anyone owns in America. That’s an amount greater than our entire national debt, accumulated over the course of two centuries.

A $16 trillion stack of dollar bills would reach all the way to the Moon. And back. Twice.

That’s enough to pay for Saturday mail delivery. For the next 5,000 years.

All of that money went from you and me to the banks. And we got nothing. Not even a toaster.

I have been patiently waiting to see whether this disclosure would provoke some kind of reaction. Answer: nope. Everyone seems much more interested in discussing whether or not they like the cut of Perry’s jib.

Whatever a jib may be.

In the next few weeks, I’m going to be writing more about this. But right now, I wanted to keep this really simple. Just give folks something to talk about when they’re standing next to the coffee maker.

The Government gave $16 trillion to the banks. And nobody else is talking about it.

Think about it. Think about what that means.

Courage,

Alan Grayson