Checks totaling more than $3.4 billion (out of $3.6 billion in total compensation) have been mailed by Rust Consulting, the payout administrator of the Independent Foreclosure Review.
More than $2.3 billion have been cashed or deposited by eligible recipients, which number about 3.9 million as of May 30, according to the Office of the Comptroller of the Currency, one of the bank regulators overseeing the IFR settlement.
That’s about a 68 percent check-clearing rate so far, which reportedly exceeds that of other big settlements with consumers, said Bryan Hubbard, OCC spokesman.
But that still leaves a big chunk — 32 percent — not cashed or deposited, despite more than a month since the bulk of the $3.4 billion was mailed out by April 26.
“The bank processing the checks has told us that the cash rate exceeds that of other consumer settlements that they have been involved with,” Hubbard said. “Agencies will continue to monitor the rate at which checks are cashed or deposited and will determine whether additional outreach is required.”
The Independent Foreclosure Review started nearly two years ago as actual reviews of botched or wrongful foreclosures by more than a dozen mortgage servicers. Most of the process was scuttled in January of this year in favor of the $3.6 billion in payouts to borrowers.
Rust has not released the number of checks returned as undeliverable, or the number of those that have to be re-issued because they were lost or destroyed for whatever reason.
Hubbard said returned checks will go through a “skip-tracing” process. That’s the term that refers to finding the whereabouts of an individual by any means possible, and usually deployed successfully by debt collectors.
It’s yet to be determined whether Rust will be left holding about a $1 billion in uncleared checks, even after the last wave of checks is mailed out this summer. Based on figures already released, the last wave totals about $200 million in payouts.
To say that Rust Consulting is under pressure is a vast understatement. In the first wave of payments mailed April 12, some checks bounced. In a separate mailing in May, 96,000 check recipients got less than they were supposed to get.
Additionally, Rust is handling $1.5 billion in compensation in the separate agreement, the National Mortgage Settlement, between five big banks — JPMorgan Chase, Bank of America, Wells Fargo, Citi and Ally — and 49 states.
Settlement claimants have been unable to get a specific payout amount or date from Rust executives. The firm has wobbled on payout timetables several times, infuriating claimants further. As it stands, the National Mortgage Settlement checks will begin to be mailed out in “mid-2013” – although an update is expected in coming days.
Here is testimony from David Holland, executive vice president of Rust Consulting, during a Senate banking committee hearing on April 17, regarding the challenges of finding the correct addresses of eligible recipients in the Independent Foreclosure Review:
“So when we had the settlement, we started with that address information and once again ran it through the national change of address database, and we’re mailing checks, you know, to the best address that we have currently. Some of those will be returned as undeliverable, and we will make other attempts to find better address information for those that are undeliverable.
“And there’s nothing in place yet, but we’ve had conversations about taking additional steps beyond what we’ve done in terms of address trace. We could implement an outbound calling program, e-mail blasts. There’s all sorts of things that may be available to us. Nothing’s set yet, but those discussions are happening.”
The OCC says borrowers with questions regarding payments should contact Rust Consulting at 1-888-952-9105, Monday through Friday, 8 a.m.-10 p.m. Eastern Time, or Saturday, 8 a.m.-5 p.m. Eastern Time.