Settlement checks sent to homeowners who were the victims of wrongful foreclosure by the nation's largest banks have bounced.
A total of $3.6 billion is currently being distributed to 4.2 million borrowers who lost their homes, or were at risk of foreclosure, as part of a settlement agreed between a group of the largest U.S. banks and regulators.
Payments starting going out Friday, but the Federal Reserve, which oversees the U.S. banking industry, said some of the early recipients had contacted its consumer helpline on Tuesday, saying that their checks could not be cashed because of insufficient funds.
Rust Consulting, the paying agent responsible for distributing the checks, said that though some of the early recipients were unable to cash their checks, the money was available. The Fed said that Rust has now fixed the problem.
"We apologize to anyone who experienced problems trying to cash their checks," Rust Consulting Senior Vice President James Parks, said in a statement on the company's website April 16. "We want to assure the public that checks we have mailed.....are valid."
More than 342,000 checks, totaling $330 million were cashed or deposited as of April 17, according to the U.S. Treasury's Office of the Comptroller of the Currency.