March 22 (Bloomberg) -- Steven J. Baum PC, the largest foreclosure law firm in New York until it shut down last year, reached a $4 million settlement with the state over abuses in its legal work.
Part of the money paid by the firm, Pillar Processing LLC, Steven Baum himself and managing partner Brian Kumiega will be used to help homeowners facing foreclosure or victims of predatory lending, New York State Attorney General Eric Schneiderman said today in a statement. Baum formed Pillar in 2007 to process foreclosure documents.
“The Baum firm cut corners in order to maximize the number of its foreclosure filings and its profits,” Schneiderman said in the statement. Baum and Kumiega have also agreed not to represent lenders or servicers in new foreclosure cases for two years, Schneiderman said.
The firm said in a statement that it didn’t admit wrongdoing as part of the settlement.
In October, the firm, based in Amherst, New York, just north of Buffalo, reached a $2 million agreement related to its foreclosure practices with Manhattan U.S. Attorney Preet Bharara. After that settlement was announced, Fannie Mae and Freddie Mac, the mortgage-finance companies under U.S. conservatorship, dropped Baum from their lists of law firms eligible to handle foreclosures. The firm then said it would close.
“After an exhaustive 10-month investigation, the attorney general’s office did not identify a single instance where a foreclosure proceeding was brought by the Baum firm where the homeowner wasn’t actually in default,” Elkan Abramowitz, a lawyer for the settling parties, said in a phone interview.
The Baum firm handled more than 100,000 foreclosures from 2007 to 2010, representing some of the biggest U.S. mortgage servicers, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc., according to Schneiderman.
The firm “routinely” brought foreclosure actions without verifying the accuracy of the allegations or the right of the lender or servicer to foreclose, the attorney general said.
“Complaints were prepared in an assembly-line fashion by non-attorney Pillar employees with inadequate attorney supervision,” according to the attorney general. “Baum firm attorneys also improperly verified and notarized these complaints.”
Schneiderman’s description in a settlement document of the relevant New York law was incomplete and in some cases incorrect, Abramowitz said.
“It is unfair to criticize the firm for relying on the representations of its clients because a century of legal precedent states that an attorney is entitled to do just that,” he said.
Last month, Bank of America, JPMorgan, Wells Fargo, Citigroup and Ally Financial Inc. negotiated a $25 billion settlement with federal agencies and 49 states to end probes into abusive foreclosure practices.
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