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NY Foreclosure Firm Agrees to $4M Settlement

iStockPhoto/Thinkstock(NEW YORK) -- A New York law firm at the center of a foreclosure controversy has agreed to a settlement with state prosecutors.

Steven J. Baum PC drew widespread criticism after the New York Times published photos of a firm Halloween party during which employees decorated the office with tents, tarps and cardboard signs while dressed as homeless people.

The Baum Firm, based in suburban Buffalo, was the largest foreclosure defense firm in New York.  It handled cases for all the major banks, but Attorney General Eric Schneiderman accused the firm of using deceptive practices, including so-called robo-signing.

“The Baum Firm cut corners in order to maximize the number of its foreclosure filings and its profits,” Schneiderman said.  

The firm admitted no wrongdoing, but agreed to pay $4 million in what the Attorney General’s office said was the largest foreclosure law firm settlement in the nation.

“For too long foreclosure law firms like Steven J. Baum PC have wreaked havoc on homeowners,” said Elizabeth Lynch of MFY Legal Services, which represents homeowners who may have been improperly foreclosed upon.  

Investigators said the Baum Firm routinely brought foreclosure cases without verifying the bank it represented actually owned the mortgage.  Prosecutors described “an assembly-line” in which attorneys signed documents prepared by a processing firm without reviewing their contents.   

Steven J. Baum PC shut down in November after Fannie Mae and Freddie Mac announced the firm was no longer eligible to handle foreclosures.  Baum himself and managing partner Brian Kumiega must pay the $4 million in settlement money themselves.

Copyright 2012 ABC News Radio

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