The largest foreclosure mill in New York, under investigation for years by federal authorities for allegedly filing misleading paperwork, affidavits and mortgage documents, yesterday agreed to pay a $2 million fine to settle a probe by Manhattan US Attorney Preet Bharara.
Steven J. Baum PC, which has filed tens of thousands of foreclosure actions across the state over the past several years, promised to change the way it did business and admitted to “occasionally” making “inadvertent errors.”
The Buffalo-based firm, which was used by every major bank in the country, did not admit any wrongdoing in the settlement deal.
Chad Rachman, Rick Kopstein/NY Law Journal
Steven J. Baum (above) of Buffalo, who owns the largest foreclosure firm in the state, has agreed to pay the feds $2 million to settle allegations he doctored paperwork and forced people out of their homes.
The agreement immediately drew howls of protest and disbelief at the low amount of the fine.
Linda Tirelli, a Westchester bankruptcy lawyer who has represented scores of clients who have run up against the Baum firm, said yesterday the fine should have been 10 times the $2 million.
“Baum’s work was beyond sloppiness -- it was outright fraud,” said Tirelli. “I’d like to see $25 million in damages instead of $2 million for all the suffering he’s caused.”
Manhattan bankruptcy lawyer David Shaev, of Shaev &Fleischman, who also has battled Baum lawyers in court, called the $2 million fine “a joke.”
“It’s toothless,” said Shaev. “Baum made millions and he gets off the hook and gets to keep his business. If I did just one-tenth of what he did, I’d lose my license.”
Under the settlement, Baum is shielded from any further federal actions.
The Baum firm, started by his dad, filed nearly 12,000 foreclosure cases in New York in 2010 alone, mostly against homeowners too poor to afford a lawyer.
Without opposition, Baum was able to successfully foreclose on hundreds of families.
Judges, some of whom have grown tired of the Baum firm’s mistakes, recently started holding the firm’s feet to the fire.
Brooklyn state court Justice Arthur M. Schack called the Baum firm’s explanations in one case “so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling.”
“Steven J. Baum PC appears to be operating in a parallel mortgage universe, unrelated to the real universe,” the judge wrote in that May 2010 decision. “Next stop, the Twilight Zone,” he said, quoting from Rod Serling’s TV series about science fiction and the supernatural.
The settlement also covers Pillar Processing, a document retrieval firm Baum started to further profit from the foreclosure boom.
While Baum is off the hook from further federal action, he could still feel some state disciplinary heat.
“Disciplinary committees of the state judiciary are aware of these issues and will have appropriate forms of review,” said Anthony Sabino, a of Sabino & Sabino, and a law professor at St. John’s University business school.
Baum has defended his firm’s paperwork, claiming it wasn’t fraudulent and resulted from “inadvertent human error.”
“In mortgage foreclosure proceedings, there are no excuses for sloppy practices that could lead to someone mistakenly losing their home,” Bharara said in a statement.
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