Banks' Law Firm to Pay $2 Milllion Over Foreclosure Practices

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New York's largest foreclosure law firm agreed last week to pay $2 million as part of a settlement over questionable foreclosure practices with the U.S. Attorney for the Southern District of New York.

Steven J. Baum PC, in Amherst, N.Y., admitted it "occasionally made inadvertent errors in its legal filings in state and federal court," said Preet Bharara, the U.S. attorney for the Southern District of New York.

Baum and Pillar Processing, a default servicing firm that Baum created in 2007, did not admit to any wrong doing and attributed foreclosure violations to "human error in light of the high volume of mortgage defaults and foreclosures," according to the 12-page settlement agreement.

Both firms have agreed to refrain from claiming their clients hold underlying mortgages and notes unless the firms actually have received and reviewed copies of original promissory notes. Baum also is barred from executing mortgage assignments on behalf of the Mortgage Electronic Registration System Inc., known as MERS.

The Baum firm is required to form a committee of three attorneys to ensure it is in compliance with provisions of the Office of the Comptroller of the Currency's consent orders with 14 servicers, many of whom were clients of the firm.

Baum's firm has handled as many as 40% of foreclosure cases in New York, representing JPMorgan Chase & Co., Wells Fargo & Co., and other large banks.

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