Real Estate & Property Law
NY Foreclosure Law Firm Settles with Feds for $2M; Deal Creates ‘Howls of Protest’
Posted Oct 7, 2011 6:55 AM CDT
By Debra Cassens Weiss
A New York law firm once accused of “operating in a parallel mortgage universe” has agreed to pay $2 million to settle a probe into misleading foreclosure documents.
The Steven J. Baum law firm did not acknowledge wrongdoing in the deal, but did admit occasional “inadvertent errors” it attributed to the high volume of foreclosures, according to the New York Law Journal, Bloomberg Business Week, the New York Post and a press release (PDF). In 2010 alone, the 87-lawyer Amherst firm filed nearly 12,000 foreclosure cases in New York, the Post says.
As part of the deal with the U.S. Attorney’s office, the law firm agreed to change its practices, partly by requiring clients to sign affidavits that they have the original promissory notes or they have searched for them. Also, the firm’s employees will no longer assign mortgages as officers or directors of the electronic mortgage registry system known as MERS.
The $ 2 million settlement also binds the firm’s spinoff company that handles back-office functions, Pillar Processing.
In an interview with the New York Law Journal, Steven Baum said the new requirements won’t have a significant impact on the firm's processing of foreclosures. “The changes that we have made should really be the set of best practices for other law firms," he said.
According to the New York Post, “The agreement immediately drew howls of protest and disbelief at the low amount of the fine.”
The Baum firm has been criticized in the past for its practices. In one case, Judge Arthur Schack of Brooklyn called the firm’s explanations “so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling.”
“Steven J. Baum PC appears to be operating in a parallel mortgage universe, unrelated to the real universe,” the judge wrote in the May 2010 decision.