Federal Government Screws Up Wrongful Foreclosure Checks

The federal government is very good at national defense.  They tend to screw up most of the other functions they attempt.  CNBC reports that the Federal Reserve announced that some 96,000 borrowers who received checks to compensate them for wrongful foreclosures on their mortgages will be getting an additional check to correct for errors in the initial payment.  The Federal Reserve said the initial checks that homeowners received were too low because of errors made by Rust Consulting, the company handling the payments.  The report states that affected borrowers had loans serviced by subsidiaries of Goldman Sachs and Morgan Stanley.

These settlement checks were part of the global settlement agreement among 13 banks that totaled $25 billion (which is a lot less than it sounds when you divide that number up among the millions of mortgages impacted by it).

To me, these check errors are representative of the whole mortgage mess of the last 4 years.  Even when the banks and government try to do the right thing, they screw it up and borrowers get short-changed (literally, in this case).  This is why I reiterate to people that, if you are facing problems with your mortgage–or you anticipate facing problems in the near future–go on the offensive with your lender.  Don’t just sit back and assume everything is going to be ok.  If you’ve submitted modification paperwork, don’t assume that they are going to promptly process it and come back with a happy result.  Stay on top of things and document EVERYTHING–who you talk with, what you sent, when you sent it, what the bank representatives told you, etc.  The more you stay on top of your lender, the more likely you will have a positive outcome.

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