NY AG settles with firm over foreclosure practices for $4M

Jessica M. Karmasek Mar. 22, 2012, 12:25pm


ALBANY, N.Y. (Legal Newsline) - New York Attorney General Eric Schneiderman has settled with a Buffalo law firm over its foreclosure practices for $4 million.

Schneiderman announced the agreement with Steven J. Baum PC, Pillar Processing LLC, Steven J. Baum and Brian Kumiega Thursday.

The $4 million will be used, in part, for programs that offer assistance to homeowners facing foreclosure or victims of predatory lending practices, the attorney general said.

As part of the settlement, Baum and managing partner Kumiega have agreed not to represent lenders or services in new foreclosure-related cases for a period of two years.

Until ceasing most of its operations in December, the Baum Firm was the largest foreclosure firm in the state, Schneiderman said.

From 2007 to 2010 alone, the firm filed more than 100,000 foreclosure proceedings and represented many of the largest servicers, including Wells Fargo, JPMorgan Chase, Bank of America, HSBC and Citibank.

Baum later formed Pillar, in 2007, to handle the bulk of the firm's highly compartmentalized foreclosure process. None of the Pillar employees were attorneys, according to the Attorney General's Office.

"The Baum Firm cut corners in order to maximize the number of its foreclosure filings and its profits," Schneiderman said in a statement.

"This settlement demonstrates that my office will not allow New York homeowners to face the drastic consequence of foreclosure based upon inaccurate documents filed in court. Foreclosure law firms must ensure that their client has the authority to sue and is the rightful holder or assignee of the note and the mortgage before filing cases."

Among the attorney general's findings, the firm routinely brought foreclosure proceedings without taking the appropriate steps to verify the accuracy of the allegations or the plaintiff's right to foreclosure.

According to Schneiderman's office, from at least 2007 through 2009, the firm's attorneys repeatedly verified complaints in foreclosure actions stating, among other things, that the plaintiff was the "owner and holder of the note and mortgage being foreclosed," when, in many securitized loan cases, the firm did not have documentary proof that the plaintiff was the owner and holder of the note and mortgage.

In addition, complaints were prepared in an "assembly-line fashion" by non-attorney Pillar employees with "inadequate attorney supervision," the attorney general said.

The law firm's attorneys also improperly verified and notarized the complaints, Schneiderman said.

The Baum Firm announced it was shutting down its operations in November, after mortgage giants Fannie Mae and Freddie Mac said mortgage servicers could no longer use the firm to handle foreclosures.

Elkan Abramowitz, an attorney representing Baum in the lawsuit, told The Associated Press the firm was pleased with the settlement but still disputed some of the attorney general's findings.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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