Upstate NY Assembly Line F'closure Mill Law Firm Attracts Spotlight, Scorn From Various Quarters; Manufactured Mortgage Assignments Among Allegations

The New York Post reports:

• As the mortgage melt down paralyzed the economy across the US and throughout New York State, one company in the center of the storm had all the business it could handle. The little-known law firm of Steven J. Baum PC, which is based in suburban Buffalo, NY, and represents dozens of banks in matters of failed mortgages, last year filed a staggering 12,551 foreclosure lawsuits in New York City and the suburbs, which works out to about 48 a day.

• The foreclosure mill is one of a handful of super-regional law firms used by the country's banks -- and its lawyers appear to have practiced in every county courthouse and bankruptcy court from Staten Island to Plattsburgh and from Montauk to Niagara Falls. But as the volume of its workload increased, so did complaints from opposing lawyers and judges that some of the thousands of lawsuits contained questionable legal work.

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• The complaints against Baum -- on the record during hearings, in legal pleadings and, eventually, borne out in judges' decisions -- include:

• * Not divulging mortgage payments: In the White Plains bankruptcy of Blanca Garcia, Baum's firm filed papers claiming Garcia was in arrears -- when she actually made payments and showed the court her receipts, but they were not credited to her account. When Garcia's lawyer complained, Baum's firm answered the claim but, the lawyer said in court papers, ignored the receipts and continued to claim the mortgage was in arrears.

• * Creating questionable assignments: A Suffolk County judge took it upon himself to investigate a filing by Baum's firm when it attempted to foreclose on the home of Gloria E. Marsh. "A careful review," the judge wrote in a four-page order, "reveals a number of glaring discrepancies and unexplained issues of substance." The judge found that Baum filed the action before the date it claimed its client took ownership of the mortgage.

• * Botched legal papers: In the bankruptcy of Matthew Austin, Baum's firm tried to prove that its client owned the mortgage backing Austin's house by filing an assignment of that mortgage from a Florida company signed by an executive of that company -- but it was notarized in Buffalo, NY. "To the extent assignor flew to upstate New York to appear before a notary in the law offices of Steven J. Baum, PC, defies all logic," the lawyer said in court papers. "Clearly this is a manufactured document intended to defraud the Court." The bank and Austin, in hopes of settling the matter, are discussing a mortgage modification.

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• Judges are taking action. A few, like Justice Jeffrey Spinner in a widely reported case in Suffolk last November, are ripping up mortgages and tossing entire cases brought by Baum after it couldn't prove its case. Second, the US Trustee, the arm of the Department of Justice charged with keeping the country's bankruptcy courts free from malpractice, has had its Manhattan office monitoring cases involving the Baum firm. And just last month, a New York bankruptcy judge said he now has "probable cause" to believe that lawyers for the Baum firm acted inappropriately.

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• Steven J. Baum, 41, took over his father's sleepy Buffalo law practice several years ago, moved it to suburban Amherst and super-sized it. It now has about 500 employees, according to an ad it placed on an online jobs site, plus has started Pillar Processing, a legal-document processing company. Pillar, too, has gotten the attention of judges. One judge blasted Baum for trying to distance himself from a bad courtroom gambit by having a non-lawyer employed by Pillar file a motion canceling the request.

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• One bank executive told a judge during a hearing in a Poughkeepsie court hearing that the bank pays law firms $650 for every referral -- presumably just to file the foreclosure action. Additional pleadings would be extra.

For more, see Liening on NY homeowners (Chase and law firm draw scrutiny over tactics in foreclosure).