Bank Settlement Checks – Rust Consulting
Believe it or not, 2-3 years after the fact, we are still getting daily phone calls from individuals who want to know about their settlement checks. What are they? Are they legit? Should they pay taxes on this income? How come they received a 1099-MISC and no check? (and the list goes on and on).
What Is Independent Foreclosure Review?
In March of 2013 (yes… 3 years ago), approximately 4.2 million people were sent notices that they would receive remuneration as a result of an agreement between federal banking regulators and 13 mortgage servicers. The mailer came from paying agent, Rust Consulting (1-888-952-9105), and Rust Consulting is the only agency that should be contacted if (previously) distressed borrowers have any questions or concerns about the settlement.
As you probably remember, the Independent Foreclosure Review was part of the settlement associated with the robo-signing debacle of 2010. (Can you believe that’s already 6 years back?) As part of this review, fourteen mortgage servicers and their affiliates are identifying customers who were part of a foreclosure action on their primary residence during the period of January 1, 2009 to December 31, 2010.
Originally, 13 mortgage servicers sent solicitation letters to 4.2 million potential victims of robo-signing and other foreclosure-related (and potentially fraudulent) matters. These letters provided homeowners the opportunity to request an independent review of their foreclosure process (a.k.a. Independent Foreclosure Review). If the review found that financial injury occurred as a result of errors, misrepresentations, or other deficiencies in the servicer’s foreclosure process, the customer might receive compensation or another remedy. However, settlement payments were ultimately made even if the original documentation was not returned to Rust Consulting.
Hot News from Rust Consulting
A few years back, I received an email from the Vice President of the company that appears to provide counsel to Rust Consulting and he provided me with some interesting statistics on disbursement:
- In its role as third-party administrator for the IFR settlement, Rust has mailed checks to more than 98 percent of the 4.17 million eligible borrowers. Mailings began in mid-April 2013 and were processed in large batches. Many cases have required additional research.
- There are still thousands of borrowers who have not yet cashed their checks.
- In an analysis of customer contacts, more than 70 percent of people who were contacted regarding their uncashed check provided the same address that Rust had on record. This indicates that a substantial number of checks might have been discarded by borrowers in error. Borrower responses to 1099 forms provide another opportunity for these people to receive their settlement funds.
- Based on guidance from tax counsel, federal regulators directed Rust Consulting to send Form 1099s to borrowers who received payments as part of the IFR. The company encourages borrowers to seek the advice of qualified tax professionals regarding IFR payments. The forms were mailed whether the associated check was cashed or not. This is in alignment with IRS reporting guidelines, which say that tax obligations – if any – do not require that a recipient has actually cashed a check.
Finally, as a reminder, if you have any questions about the status of your IFR check or a 1099-MISC, please contact Rust Consulting directly. Please do not contact our office 😉