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Foreclosure Abuse Creates Compensation Check Follies

According to a recent NY Times article, U.S. citizens are getting the proverbial runaround from a firm – Rust Consulting – chosen by the U.S. government to distribute checks due after a settlement was reach with some of the country’s largest banking institutions. Rust sent checks out without the funds to support their being cashed, then replaced them with checks for lesser amounts than owed. Of course most people know if you cash such a check, you could be considered as “accepting” the amount as full payment, so many are still holding out for the right dollar amount and a check that will cash.

Legislators at Capitol Hill are outraged, insisting on abuses not only by Rust, but they are also questioning the government officials responsible for overseeing the proper distribution of funds. Rust had been a favorite in more than 50 federal contracts, and has a lobbying arm known for generously donating to political campaigns in D.C. Apparently when several banks brought up different companies to use in the settlement of foreclosures, government overseers objected and all but insisted that Rust be hired for the position.

Though in January of 2012 the foreclosure settlement was reached, Rust delayed notices to homeowners and subsequently took several weeks to issue them. Rust then forgot to transfer money into the settlement account, actually causing some of the checks to bounce. There were even incidents of checks having been issued to borrowers who had died, and others sent to the address of the foreclosed upon home – from which the borrower had long since vacated.

Photo credit: http://www.flickr.com/photos/carbonnyc/2204277278/

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