Nearly 600 Michigan homeowners who were owed their share of a $27.5-million class action are angry that the checks bounced, leaving a trail of fees and frustration.

Rob Lalain, 34, of Novi was one of the plaintiffs and said his check for $635.34 dated Sept. 5 bounced. He was hit with a $10 bad-check fee.

"It's pretty damn weird. It is a $27-million lawsuit, and they are sending out bad checks," Lalain said.

Lalain is one of the more than 66,000 new-home buyers in Michigan who won the settlement after they were overcharged for title insurance while home builders got discounts. The arrangement violated federal law.

The settlement, approved in February, applied to people who bought newly built homes between December 1998 and July 2005 and purchased title insurance from Chicago Title Insurance Co. of Missouri, Transnation Title Insurance Co. of Arizona, First American Title Insurance Co. of California or Lawyer's Title Insurance Corp. of Virginia.

One of the plaintiffs' lawyers, Jeff Yellen of Farmington Hills, says he was flooded with calls this week and arranged for the bank to reissue the 594 checks today  with a letter explaining the problem. The bank will add $20 to each check to cover the bounced-check charges and it plans to cover any other charges people incurred because the checks bounced, he said.

The rest of the 66,000 checks distributed last week to Michigan homeowners who were overcharged by title insurance companies were good, he said.

"What was important to me is we have more than enough money in these accounts and my phone is ringing off the hook," Yellen said.

The problem was caused by an error by U.S. Bank of Minneapolis, he said. Yellen said he hired Rust Consulting of Minneapolis to handle the payout to plaintiffs in the class action. Rust then arranged for U.S. Bank to accept the funds from the defendants and handle the check processing to the class members.

Rust Consulting declined to comment Wednesday, and a U.S. Bank spokeswoman said she had no information on the matter.

The lawsuit was filed in 2000 by Yellen and two other lawyers, Patrick Bruetsch and David Davis of Birmingham.

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