On Thursday, New York Attorney General Eric T. Schneiderman’s office announced a $4 million settlement agreement with the nearly defunct Steven J. Baum PC law firm in Amherst and the firm’s processing center, Pillar Processing LLC.
As part of the settlement agreement, Steven J. Baum and Baum firm managing attorney Brian Kumiega agreed not to represent lenders or servicers in foreclosure-related cases for two years.
The AG launched an investigation into alleged foreclosure case abuses by the firm and its processing center last April. The Baum firm handled a large volume of home mortgage lenders’ New York state foreclosure cases.
The investigation found the Baum firm routinely filed court papers in foreclosure proceedings that were not verified, not properly notarized and/or did not give the firm the right to foreclose.
An attorney representing Baum, Lawrence S. Bader of Morvillo, Abramowitz, Grand, Lason, Anello & Bohrer PC in New York City, said the agreement was actually reached on Feb. 14 and he was unsure why the attorney general waited until now to release it.
The Baum firm admitted no wrongdoing as part of the settlement but attorneys for Baum disputed the AG’s findings.
“Fairness is in the eye of the beholder,” Bader said in describing the settlement.
Baum’s attorneys said they were relieved that the matter is concluded but stressed the inaccuracy of the AG’s legal analysis.
“It is important to emphasize that after an exhaustive 10 month investigation, the attorney general’s office did not identify a single instance where a foreclosure proceeding was brought by the Baum firm where the homeowner wasn’t actually in default,” said Elkan Abramowitz, also of Morvillo Abramowitz, in a statement.
Abramowitz said the Baum firm merely relied on clients representations. Baum’s clients included such major home lender banks as Wells Fargo, HSBC, Citibank, Bank of America and JPMorgan Chase.
“It’s always better to get an admission of guilt, but it’s not a huge deal,” said Rebecca Case-Grammatico, Empire Justice Center senior attorney. “Baum is already out of business. The message is clear to other firms.”
Of greater concern to foreclosure prevention assistance organizations, such as Empire Justice, is when they might receive the money secured by the AG in the Baum case, or from the recent settlement with major national lender banks for deceptive foreclosure filings.
“It’s a lengthy process to get the money into the hands of those who need it. The grant process is long and I suspect it could take about a year,” Case-Grammatico said.
The Attorney General’s Office said $2 million of the settlement agreement would be added to the $1 million the AG promised to foreclosure prevention assistance providers in January.
The Baum firm and Pillar Processing also reached a $2 million settlement agreement with the U.S. Attorney’s Office in the Southern District of New York in October 2011 for similar allegations of filing inaccurate court documents in foreclosure cases.
The Baum firm announced it was laying off the bulk of its employees last November when Freddie Mac and Fannie Mae announced mortgage servicers could no longer utilize the firm in foreclosure actions.
In an August interview, Baum told The Daily Record that New York is the most complex state in which to file a foreclosure case.
“It’s highly regulated and that complexity has only increased,” he said.
“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,” Schneiderman said in announcing the settlement. “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.”