Rust Consulting, which handled the borrower mailings during the Independent Foreclosure Review and is now acting as paying agent, continues to screw up in every way imaginable.
Recall that Rust and the servicers were criticized by the GAO for producing borrowers outreach letters that were written well over the head of the average American and were deemed by the GAO to have made inadequate efforts to reach borrowers eligible for a review. After the settlement was reached in embarrassing haste and payments were determined in an arbitrary manner, Rust sent out checks that in many instances bounced. Rust also has made it cumbersome for recipients to provide current addresses (readers have reported receiving changing instructions, and apparently taking their lead from servicers, not processing completed forms). And we’ve wondered whether this incompetence is by design, since Rust’s current owner, private equity powerhouse Apollo, has deep ties to the residential real estate industry, and the firm is being sold to the venture capital arm of Citigroup.
The latest blunder: Rust sent out checks that were too small to some eligible borrowers. The Fed put out a press release with the not-exactly-forthcoming headline “Federal Reserve provides additional information on borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley” (Deontos):
Some borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley and who were already sent a check as part of the Independent Foreclosure Review payment agreement will be sent an additional payment around May 17, Rust Consulting announced Wednesday . The payments are being made to correct an error by Rust Consulting, the paying agent, when the original payments were sent last week.
As Rust Consulting has announced, approximately 96,000 borrowers whose loans were serviced by the former subsidiaries of Goldman Sachs (Litton Loan Servicing LP) and Morgan Stanley (Saxon Mortgage Services, Inc.) were sent checks for less than the payment amount that the Federal Reserve directed Rust to pay. The new checks will make up the difference between what was in the original check sent by Rust and what should have been paid. Borrowers should cash both the original checks and the supplemental checks.
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More Foreclosure Settlement Fiascoes: Rust Consulting Underpays Some Harmed Borrowers « naked capitalism