Borrowers compensated under settlements reached between top banks and U.S. regulators earlier this year were hit with problems when attempting to cash the checks they received, the Federal Reserve said on Wednesday.

Some early recipients of the payments, the majority of which fell in the $300 to $600 range, were told their checks were rejected.

The Fed said in a statement that "early problems with some checks have been corrected," and that all funds are available for the settlement checks to be cashed.

An independent review of banks' foreclosure files was ordered by regulators in April 2011 to determine the necessary compensation for borrowers impacted by foreclosure flaws and other processing mistakes.

More than 50,000 people have already cashed or deposited checks related to the agreement reached by federal bank regulatory agencies and 13 mortgage servicers, the Fed said. Some 4.2 million borrowers are eligible to receive payments.

"The Board will continue to monitor the payments closely and encourages borrowers who have concerns or experience difficulties cashing their checks," the Fed said in a statement.