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NEW YORK — When the bank account is running dry and the mortgage payment is coming due, the phrase ‘‘insufficient funds’’ is the last thing you want to hear.

Now imagine hearing those two words when trying to cash a long-awaited check from the same bank that foreclosed on you.

Many struggling homeowners got exactly that this week when they lined up to take their cut of a $3.6 billion settlement with the nation’s largest banks — lenders accused of wrongful evictions and other abuses.

It is unclear how many of the 1.4 million homeowners who were mailed the first round of payments covered under the foreclosure settlement have had problems with their checks. But housing advocates from California to New York and even regulators say that in recent days frustrated homeowners have bombarded them with complaints and questions.


The first round of the settlement checks were mailed last week. In recent days, problems arose at Rust Consulting, a firm chosen to distribute the checks, people briefed on the matter said. After collecting the $3.6 billion from the banks, these people said, Rust failed to move the money into a central account at Huntington National Bank in Ohio, the bank that issued the checks.

Many banks, after spotting a phone number for Huntington on the back of the checks and confirming the legitimacy of the money, agreed to process the payments. But some credit unions, check cashers, and community banks apparently looked only at the account number on the unfamiliar-looking checks and ultimately found a zero balance, the people briefed on the matter said.

Rust says it does not know how many homeowners encountered the check mishap, adding only that it ‘‘was aware of 12 situations.’’

Still, banking regulators, frustrated with missteps at Rust, urged the consulting firm to shore up the account Tuesday. Now, regulators say the problems are resolved, and they are urging homeowners to try again.


‘‘We apologize to anyone who experienced problems trying to cash their checks,’’ a senior vice president at Rust said in a statement.