Andrew Keshner, New York Law Journal
Attorneys who represent lenders bringing foreclosures are “an easy target for criticism” in the current economic climate, says Steven J. Baum, who runs by far the largest New York state firm offering services to what its website calls the “default industry.”
Indeed, Baum and his firm, Steven J. Baum, P.C., have faced increasing criticism with a surge in foreclosures sought by client lenders, who have been struggling to mop up the financial debris from the burst housing bubble.
The once-obscure Buffalo-area firm has become a fixture in courthouses throughout the state. Last year, it sought judicial action in 17,620 foreclosure cases, nearly 40 percent of the 46,572 reported by the court system. (The statewide total has more than doubled from the 22,601 recorded in 2005).
While Baum’s business has soared, however, his firm has been reviled as a “foreclosure mill” that tramples on the rights of homeowners.
Critics claim the Baum firm’s high-volume practice makes it prone to error and inconsistencies. Adversaries accuse it of “sloppy” work, inadequate documentation for the actions it brings and poor communications. One federal suit even accuses it of knowingly filing “false and fraudulent” court documents.
Several judges have faulted the Baum firm’s lawyers for what the judges said was the firm’s failure to prove its clients owned properties on which they were seeking to foreclose — an area that has been muddied by “securitization” of mortgages and their serial assignment from one institution to another.
One state judge compared the firm’s explanations for defects in foreclosure papers to the fanciful scenarios authored by Rod Serling, the creator of “The Twilight Zone.”
Another judge levied a sanction of almost $20,000 for the “misrepresentation” of statements in a foreclosure petition and “willful carelessness.”
“Baum has been professionally irresponsible, which has impeded the proper administration of justice,” the judge concluded.
And at least two bankruptcy trustees have suggested sanctions against the firm.
Baum declined to be interviewed for this article, but he did provide written answers to questions posed by the Law Journal. He used those responses to defend what he said is his firm’s professional approach to an “extremely complex” area of the law.
“The term ‘foreclosure mill’ is offensive,” he said. “Yet we don’t see firms being called ‘securitization mills’ for the vast number of mortgage securitization work they did. If what we did was easy, there would be hundreds of firms doing it, yet there are about a dozen who actually practice in the area.”
Responding to a federal court suit, Baum said in a statement to the Buffalo News that “we follow the rules and regulations regarding the various processes involved in a foreclosure proceeding and take the utmost care in doing so.”
He wrote the New York Law Journal, “We practice throughout the state and there are hundreds of judges who have no issue with our work.”
Baum’s firm is not alone in facing criticism as lenders and their attorneys have come under increasing scrutiny nationwide.
Investigations are under way by all 50 state attorneys general, Congress and mortgage loan guarantors Fannie Mae and Freddie Mac. Several large banks, some of them Baum clients, briefly suspended foreclosures last year in the wake of spreading allegations of “robo-signing” and other irregularities.
Meanwhile, Chief Judge Jonathan Lippman has ordered all attorneys bringing foreclosure actions in New York to submit an affirmation attesting to the accuracy of the documents they file — a requirement that sources say Baum and other attorneys active in the New York State Bar’s Real Property Section sought to soften.
“The affirmation requirements have required law firms to work with their clients in an effort to comply with the new rules,” Baum said in his e-mailed statement. “Clients of the firm are working with us to achieve this goal.”
