Skip to main content

New York AG Reaches $4 Million Settlement With Foreclosure Mill
Mar 22, 2012

New York State Attorney General Eric T. Schneiderman has announced an agreement with Steven J. Baum PC, Pillar Processing LLC, Steven J. Baum, and Brian Kumiega, requiring them to pay $4 million to New York State in penalties, costs and fees, which will be used in part for programs that offer assistance to homeowners facing foreclosure or victims of predatory lending practices. The agreement stems from abuses in their foreclosure-related legal work. Baum, founding partner of Steven J. Baum PC, and Managing Partner Brian Kumiega also agreed to not represent lenders or servicers in new foreclosure-related cases for a period of two years. Until ceasing most of its operations on or about Dec. 31, 2011, the Baum Firm was the largest foreclosure firm in New York State. Between 2007 and 2010, the Baum Firm filed more than 100,000 foreclosure proceedings and represented many of the largest servicers of residential mortgage loans, including Wells Fargo, JPMorgan Chase, Bank of America, HSBC and Citibank. Pillar was formed by Baum in 2007 to handle the bulk of the Baum Firm’s highly compartmentalized foreclosure process. None of the Pillar employees were attorneys. “The Baum Firm cut corners in order to maximize the number of its foreclosure filings and its profits,” said AG Schneiderman. "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.” Approximately $2 million of the settlement funds will be added to the $1 million already announced by AG Schneiderman in January, to aid New Yorkers in foreclosure or at imminent risk of foreclosure. Schneiderman's investigation found that the Baum Firm routinely brought foreclosure proceedings without taking appropriate steps to verify the accuracy of the allegations or the plaintiff's right to foreclose. From at least 2007 through sometime in 2009, Baum Firm 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 Baum Firm did not have documentary proof that the plaintiff was the owner and holder of the note and mortgage. Complaints were prepared in an assembly-line fashion by non-attorney Pillar employees with inadequate attorney supervision. Baum Firm attorneys also improperly verified and notarized these complaints. Attorneys routinely signed complaint verifications—which stated, among other things, that the attorneys had read the complaints and knew their contents—without reviewing the contents of the complaints or the underlying documents such as the original note or mortgage or any mortgage assignments. During certain time periods, attorneys often did not see complaints after they were prepared by Pillar employees. Instead, attorneys pre-signed and notarized verification and certification pages that were subsequently attached to the complaints and filed with the county clerks. Even after the practice of attaching pre-signed and notarized verification and certification pages changed, attorneys continued to verify complaints without reading them. Until sometime in 2011, the Baum Firm also failed to properly notarize documents signed by its attorneys. Baum Firm attorneys routinely signed documents without being in the notaries’ presence, and when documents were signed prior to notarization, did so without the required oath being administered. Indeed, some notaries even notarized documents that were signed by an attorney who was not present in the state at the time the documents were notarized. The Baum Firm also repeatedly failed to timely file the Request for Judicial Intervention (RJI) required to be filed in residential foreclosure actions and a court-required affirmation attesting to the accuracy of the foreclosure summons and complaint. New York Chief Judge Jonathan Lippman implemented the attorney affirmation requirement in October 2010 in response to revelations of widespread deficiencies in foreclosure filings nationwide, including the execution of affidavits without personal knowledge of the facts, a practice referred to as "robo-signing." The filing of the RJI triggers the scheduling of a settlement conference where potential loan modification options are explored, and also leads to notice being sent to local housing counselors that a homeowner is at risk of foreclosure so that counselors can reach out to the homeowner to provide assistance. Many homeowners were denied this assistance as a result of the Baum Firm's failure to file RJIs in a timely manner. The Baum Firm, which the Attorney General began formally investigating in April 2011, has been the target of much criticism. Various courts have found that cases brought by the Baum Firm failed to adequately demonstrate the basis for the relief sought or that the legal documents contained an error. This past November, the Baum firm reported that it was shutting down its operations after Fannie Mae and Freddie Mac announced that mortgage servicers could no longer use the Baum Firm to handle foreclosures.
Mar 22, 2012
6 Federal Agencies Seek Comment On Proposed Rule For AVMs

The rule is intended to ensure the credibility and integrity of Automated Valuation Models.

FHA Proposes New Program To Help Struggling Homeowners

Legal expert questions whether agency has authority to implement the program.

Fitch Places Fannie, Freddie On Negative Ratings Watch

Ties credit rating to outcome of U.S. debt limit negotiations.

FHFA Director Strongly Defends New GSE Pricing Framework 

Tells House committee it’s “simply not true” that financially stronger borrowers are subsidizing others.

MBA CEO Criticizes Government Response To Economic Challenges

CEO Bob Broeksmit calls for sensible Regulation, clarity, and support for the mortgage industry.

Freddie Mac Updates Income Assessment Tool To Use Digital Pay Stubs

Says new capability helps lenders calculate borrower income more quickly and precisely.