Nov. 18 (Bloomberg) -- Fannie Mae and Freddie Mac, the mortgage-finance companies operating under U.S. conservatorship, dropped Steven J. Baum PC from their list of law firms eligible to handle foreclosures.
“After Nov. 15, 2011, servicers may not refer any new Fannie Mae foreclosure or bankruptcy cases in New York to Steven J. Baum PC,” Fannie Mae said in servicing notice that day.
Freddie Mac announced its ban Nov. 10. Both companies said the Baum firm would continue to work on matters referred before the effective dates. Neither said why the firm was being suspended.
Last month, Steven J. Baum PC, one of the largest foreclosure law firms in New York state, agreed to pay the U.S. $2 million and change its practices to resolve a probe of its foreclosure filings. The agreement concluded an investigation into whether the firm filed misleading pleadings, affidavits and mortgage assignments in courts, according to a statement by U.S. Attorney Preet Bharara in Manhattan. The settlement didn’t constitute a finding of wrongdoing.
Earl Wells, a spokesman for Baum, didn’t immediately return a call seeking comment on Fannie Mae and Freddie Mac’s actions.
Brad German, a spokesman for McLean, Virginia-based Freddie Mac, said the company doesn’t comment on why it drops law firms from its list.
“We add and subtract designated counsel all the time,” he said in a phone interview today.
Amy Bonitatibus, a spokeswoman for Washington-based Fannie Mae, said that, beyond the servicing notice, she could only say that “Fannie Mae has permitted servicers to transfer existing cases from the Baum firm to new counsel.”
Steven J. Baum PC, located in Amherst, New York, just north of Buffalo, has attracted lawsuits and fines for its actions during the housing crisis. It has been accused of overcharging, filing false documents and representing parties on both sides of a mortgage transfer. On Oct. 28, a New York Times column reported that the Baum firm held a Halloween party last year during which employees dressed as foreclosed-upon homeowners.
New York Attorney General Eric Schneiderman is investigating the Baum firm, two people familiar with the matter said in May. Danny Kanner, a spokesman for Schneiderman, declined to comment on the investigation.
Earlier this year, Florida foreclosure firm Law Offices of David J. Stern ceased processing home-seizure cases after Fannie Mae, Freddie Mac and home-loan servicers, including the largest U.S. banks, dropped it.
“GMAC Mortgage no longer uses the Steve Baum law firm and began suspending its activity with that firm in September,” Gina Proia, an Ally Financial Inc. spokeswoman, said in an e-mail.
Thomas Kelly, a JPMorgan Chase & Co. spokesman, said the bank doesn’t comment on vendor relationships and wouldn’t say whether it continues to use the Baum firm.
“We have terminated that relationship,” Lawrence Grayson, a Bank of America Corp. spokesman, said in a phone interview. That occurred before Fannie Mae’s and Freddie Mac’s announcements, Grayson said.
“We are evaluating and monitoring the firm and we will respond in the best interest of our customers and investors,” Vickee Adams, a Wells Fargo & Co. spokeswoman, said of the Baum firm in an e-mailed statement.
Mark Rodgers, a Citigroup Inc. spokesman, declined to comment on the Baum firm.
State attorneys general and federal regulators are negotiating with banks including JPMorgan and Bank of America to try to reach a settlement over faulty foreclosure practices.
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