A.G. Schneiderman Announces $4 Million Settlement With New York Foreclosure Law Firm Steven J. Baum P.C. And Pillar Processing LLC

The Baum firm put out a statement that expressed relief at having reached a settlement but also challenged some the claims made by the attorney general.

“As the firm finalizes the process of closing, it is relieved to bring this matter to a conclusion,” said Elkan Abramowitz of Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, who represented Messrs. Baum and Kumiega, along with the firm and Pillar Processing. The statement stressed that there was no admission of wrongdoing on the part of the Baum firm. “It is important to emphasize that after an exhaustive ten 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.”


A.G. Schneiderman Announces $4 Million Settlement With New York Foreclosure Law Firm Steven J. Baum P.C. And Pillar Processing LLC

Top Two Attorneys At Firm, Steven J. Baum and Brian Kumiega, Barred From Representing Lenders Or Servicers In New Foreclosure-Related Cases For Two Years

Largest Foreclosure Law Firm Settlement In The Nation Related To Improper Legal Filings, Includes $2M In Assistance For Homeowners Facing Foreclosure

Schneiderman: Baum Firm Cut Corners In Order To Maximize The Number Of Its Foreclosure Filings And Its Profits

NEW YORK – Attorney General Eric T. Schneiderman today announced an agreement with Steven J. Baum P.C. (“Baum Firm”), Pillar Processing, LLC (“Pillar”), Steven J. Baum, and Brian Kumiega requiring them to pay $4 million to New York State in penalties, costs and fees, which will be used in part for programs that offer assistance to homeowners facing foreclosure or victims of predatory lending practices. The agreement stems from abuses in their foreclosure-related legal work. Baum Firm founder Steven J. Baum and managing partner Brian Kumiega also agreed to not represent lenders or servicers in new foreclosure-related cases for a period of two years. Until ceasing most of its operations on or about December 31, 2011, the Baum Firm was the largest foreclosure firm in New York State.

Between 2007 and 2010, the Baum Firm filed over 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 highly compartmentalized foreclosure process. None of the Pillar employees were attorneys.

“The Baum Firm cut corners in order to maximize the number of its foreclosure filings and its profits,” said Attorney General 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 Attorney General 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 appropriate steps to verify the accuracy of the allegations or the plaintiff’s right to foreclose. From at least 2007 through sometime 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. Even after the practice of attaching pre-signed and notarized verification and certification pages changed, attorneys continued to verify complaints without reading them. Until sometime in 2011, the Baum Firm also failed to properly notarize documents signed by its attorneys. Baum Firm attorneys routinely signed documents without being in the notaries’ presence, and when documents were signed prior to notarization, did so without the required oath being administered. Indeed, some notaries even notarized documents that were signed by an attorney who was not present in the state at the time the documents were notarized.

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.” The filing of the RJI triggers the scheduling of a settlement conference where potential loan modification options are explored, and also leads to notice being sent to local housing counselors that a homeowner is at risk of foreclosure so that counselors can reach out to the homeowner to provide assistance. Many homeowners were denied this assistance as a result of the Baum Firm’s failure to file RJIs in a timely manner.

Rebecca Case-Grammatico, Senior Staff Attorney, Empire Justice Center said: “Empire Justice Center applauds Attorney General Schneiderman for his successful settlement with the Stephen J. Baum Law Firm and his continued support for advocates assisting homeowners facing foreclosure. We truly appreciate that settlement funds from this case will be committed to providing much-needed funding for legal services to help correct the injustices in many of these cases which are still pending in the courts. We look forward to continuing to work with the Attorney General to deliver justice for the homeowners of New York.”

Elizabeth Lynch, Staff Attorney, MFY Legal Services said: “We applaud the Attorney General’s leadership in making these entities accountable to the people of New York State. For too long, foreclosure law firms like Steven J. Baum P.C. have wreaked havoc on homeowners, and this settlement sends a signal that New York State will not tolerate such improper conduct. But Steven J. Baum is not off the hook yet. MFY represents a class of people adversely affected by his deceptive practices and our clients look forward to vindication of their rights.”

The Baum Firm, which the Attorney General began formally investigating in April 2011, has been the target of much criticism. Various courts have found that cases brought by the Baum Firm failed to adequately demonstrate the basis for the relief sought or that the legal documents contained an error. This past November, the Baum firm reported that it was shutting down its operations after Fannie Mae and Freddie Mac announced that mortgage servicers could no longer use the Baum Firm to handle foreclosures.

The settlement is the most recent part of the Attorney General’s comprehensive investigation of misconduct in the mortgage market. The Attorney General’s investigation seeks to hold banks and their agents accountable for their role in the foreclosure crisis, provide meaningful relief to homeowners and investors, and provide a full description of the facts to ensure that mortgage abuses of this scale do not happen again.

The Attorney General has taken a number of important steps in furtherance of these goals, including securing more than $130 million for struggling New Yorkers as part of a national settlement with the nation’s top five mortgage servicers and filing a major lawsuit against the nation’s largest banks and Mortgage Electronic Registrations System, Inc. for deceptive and fraudulent foreclosure filings. The Attorney General was also recently selected by President Obama to co-chair a federal-state task force investigating mortgage fraud.

The settlement resolves claims that the Baum Firm, Pillar, Steven J. Baum, and Kumiega violated New York Executive Law § 63(12) and General Business Law § 349.

New Yorkhomeowners who believe their homes were foreclosed based upon false or inaccurate documents filed in court should seek representation from an attorney. They may also file a complaint with the New York Attorney General’s Bureau of Consumer Frauds & Protection by calling 800-771-7755 or visiting www.ag.ny.gov.

The investigation was handled by Assistant Attorneys General Laura J. Levine and Jim Morrissey and Special Counsel Mary Alestra under the supervision of Deputy Bureau Chief of the Bureau of Consumer Frauds & Protection Jeffrey K. Powell, Bureau Chief Jane M. Azia, and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.

SOURCE: http://www.ag.ny.gov

Or as David Dayen puts it…

Once again, Baum will not have to admit or deny wrongdoing in the case, and while this is the largest fine of a foreclosure mill law firm in the history of this foreclosure fraud saga, that’s not saying much. The barring from working on foreclosure cases had to be imposed on Baum and Kumiega directly, because the Baum firm no longer exists, having gone out of business late last year. Anyway, the proper penalty for members of a law firm filing repeated false documents would be disbarment, one would think. And because lawyers in New York must attest to the veracity of the documents they file, a judicial ruling made specifically for foreclosure fraud, this settlement with merely civil penalties seems like it misses a step.



11 Responses to “A.G. Schneiderman Announces $4 Million Settlement With New York Foreclosure Law Firm Steven J. Baum P.C. And Pillar Processing LLC”
  1. Interested says:

    Has the settlement been filed? Can someone post a link if they’ve found it?

  2. Wake Up America! says:

    Let me get this straight – the AG’s office did an “exhaustive investigation” and could not find one instance where a borrower was not in default? Not one example of a borrower who was sending in their full monthly payment – or sent a single payment to cure the default – but was still foreclosed on? Their “investigation” must not have been that “exhaustive.”

    And only 4 million? How much did Baum take in before effectively being shut down? Oh, and I’m sure that 4 million will go towards foreclosure prevention programs. After administrative costs are deducted, of course. That will leave about $1,500.

    I told people not to get too excited about Schneiderman when he was a hold-out in thr national settlement. New York – your guy turned out to be a sell-out. Schneiderman is a fraud.

    • Bobbi Swann says:

      @ WUA: You’re right on about the $1500. Truth be known that money will only lengthen the jobs of the so-called ‘homeowner help’ associations. They are filled with the old cronies of the banking industry so don’t be fooled that they are going to help the homeowner! Their jobs will be secure with all of this cash flow coming from lawsuits, settlements and the like. Nothing for the wronged homeowners! Poor New Yorkers they were hooked; line and sinker with Eric S. He turned out to bend over…..and still no crimminal indictments!

  3. kravitz says:

    “They did nothing wrong. This will not impact our tee time or upcoming dinner date.”

    If you’re wondering if there’s a photo of someone with that fired part-time dominatrix from his office, we think alike.

  4. Zoe says:

    I had a lot of hope for NY, but the “savior” Schneiderman turns out to be a typical politician. To say a homeowner is not paying is one thing, but to say that they were in default to the party Baum represented is a conclusion that should be left to the high court, (unless Schack is involved), not Schneiderman or Baum.

    Listen up, homeowners! If you are current with your mortgage payment and you expect to keep paying, you MUST pay the party entitled to enforce to ensure debt discharged dollar for dollar. If a borrower pays a party not entitled to enforce the note, and the real party shows up with its hand out for payment, the only recourse to recover the amount paid to the wrong party is expensive litigation.

    In a FAILING economy, with doom in sight, those who still are paying loans on underwater property are essentially paying rent, with debt–and maintenance and taxes (sure to increase dramatically soon)–on their shoulders. Now, that, folks, is a win/win for the banks.

  5. jaclyn says:

    Filing false documents isn’t grounds for disbarment ??? ????????????????????????????
    This Baum guy should be punished . His punishment: disbarment and a forced work order to clean the yards and the homes he destroyed. I think they call it “COMMUNITY SERVICE”.

    • joi says:



  6. Stupendous Man - Defender of Liberty, Foe of Tyranny says:

    “requiring them to pay $4 million to New York State”

    Seems Schneiderman is better at advocating for the state than he is the people.

  7. Mario Kenny says:

    “It is important to emphasize that after an exhaustive ten 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.”

    the issue is not a default, but who is the money owed too? they committed fraud and this is what brought down the whole financial system, it was not the deadbeats it was the wall street and the people who supported them, you see cutting the same branch you sit on is not such a good idea.

    • Attorney Wendy Alison Nora says:

      Exactly right! In default to WHOM?
      Also, how did the default occur? Was it from fraudulently charged late fees, misapplication of payments, unnecessary and fraudulent forced-place insurance, failure to credit payments, etc.? Most judges are still confused and think that the only issue is default. Defaults can be cured if correct amount of payments due are accepted by the party who has the right to collect. And, who would that be? I suspect it is actually the Fed, hiding behind the GSEs and the Treasury bailouts.
      I get so weary of the “homeowner in default” justification. This, from entities which are, in fact, bankrupt themselves and are subsisting on the float from .09% interest loans from the Fed discount window invested in US debt (treasuries) at 3%. We could all cash flow on a 2% multibillion dollar float. Why do they still get to take the homes? Double, triple, quadruple dipping and then the only real asset–land and improvements–is handed over to the fraudulent claimant on forged paperwork and false claims of standing. Did the banking scam artists think that no one would figure this out? When they start to lose, they try to change the law: See the Permanent Editorial Board of the Uniform Commercial Code report of November 14, 2011 in which the issue of the Article 9 “creditor” in secured transactions is parenthetically called the “transferor.” Article 9 doesn’t include the language “transferor” and this is conveniently supplied by a private interest group masquerading as acting in the “public interest.” This is truly the Trojan Horse:
      As with all lies, this too will not stand.

  8. joi says:

    Where are the hand cuffs. This was yet another slap on the wrist.

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