A New York foreclosure law firm has agreed to a $4 million settlement stemming from alleged abuses in their legal work, New York Attorney General Eric T. Schneiderman's office announced.
Steven J. Baum P.C. (Baum Firm), Pillar Processing LLC, Steven J. Baum and Brian Kumiega were named in the settlement.
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 Steven J. Baum in 2007 to handle the bulk of the Baum Firm’s foreclosure processes. None of the Pillar employees were attorneys.
As part of the settlement, Baum and managing partner Kumiega also agreed to not represent lenders or servicers in new foreclosure-related cases for two years. Until ceasing most of its operations on or about December 31, 2011, the Baum Firm was the largest foreclosure defense firm in New York State. Baum and Kumiega were not immediately available for comment.
“The Baum Firm cut corners in order to maximize the number of its foreclosure filings and its profits,” says 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.”
Two million dollars of the settlement funds will be added to the $1 million already announced by Schneiderman in January, to aid New Yorkers in foreclosure or at imminent risk of foreclosure.
The Attorney General's investigation found that the Baum Firm routinely brought foreclosure proceedings without taking necessary steps to verify the accuracy of the allegations or the plaintiff's right to foreclose. From at least 2007 through some time 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.
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."
