The first round of payouts from the $8.5 billion foreclosure settlement is well underway with nearly 50,000 checks already cashed or deposited, accounting for $50 million in total funds, the Office of the Comptroller of the Currency said.
The Federal Reserve followed this announcement with an advisory saying early problems with some of the checks have been corrected and funds are available to cash all of the checks.
"Some early recipients of checks informed the Federal Reserve's consumer helpline on Tuesday that they were told their checks could not be cashed," the Federal Reserve said. "Members of the Board staff contacted the paying agent, Rust Consulting, Inc., and the paying bank, The Huntington National Bank. Rust subsequently corrected problems that led to some checks being rejected."
The payments are part of the Federal Reserve and the Controller’s $8.5 billion settlement deal with 13 mortgage servicers.
As part of the deal, both sides agreed to end a massive independent foreclosure review process that was initiated as part of an earlier foreclosure settlement between banks and regulators.
In place of the review, the latest settlement included $3.6 billion in funds to compensate borrowers who went through foreclosures in the years 2009 and 2010. The deal applies specifically to foreclosures launched by the 13 settling banks.
Regulators mailed the first wave of 1.4 million checks on April 12.
The final round of payouts is expected in mid-July.