NY AG Expressing Doubts On Progress In Nat'l Fraud Probe? Issues Subpoenas On Major State Foreclosure Mill & Related Document Preparation Sweatshop

The New York Times reports:

• Eric T. Schneiderman, the New York attorney general, has issued subpoenas to the state’s largest foreclosure law firm and a related company, indicating that his office has some doubts about the effort by state attorneys general to resolve questionable foreclosure practices among the nation’s top banks.
• The New York investigation appears to center on two of the state’s foreclosure industry giants: the Steven J. Baum firm, headquartered in Amherst, N.Y., and Pillar Processing, a default servicing firm set up by Mr. Baum that was spun off in 2007. Representing JPMorgan Chase, Wells Fargo and other large banks, the Baum firm has handled an estimated 40 percent of foreclosure cases in the state. Pillar Processing provides extensive services to the firm.(1)

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• Attorneys general across the country have been working on ways to rectify foreclosure improprieties by the nation’s biggest banks and have entered into negotiations in recent weeks with these institutions about a national settlement. Tom Miller of Iowa is leading that effort. While Mr. Schneiderman has been participating, his new investigation points to the possibility that he will take a different path.

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• Along with the attorney general, federal prosecutors in Manhattan have requested information about the Baum firm’s practices, according to a lawyer who has represented borrowers against the firm. The lawyer spoke on condition of anonymity because the communications with the prosecutors were private. A spokesman for the Department of Justice declined to comment.

For more, see New York Subpoenas 2 Foreclosure-Related Firms.

(1) In one case, according to the story, Judge Scott Fairgrieve in Nassau County district court imposed sanctions of $5,000 on the Baum firm in a foreclosure case and required it to pay more than $14,000 in fees to the borrower’s lawyers last November. When awarding the sanctions, the judge wrote: “Bringing legal proceedings when there is no legal right to do so, due to lack of standing, stalls the efficient administration of justice in the system.” Federal Home Loan Mtge. Corp. v Raia, 29 Misc 3d 1226, 2010 NY Slip Op 52003 (Dist. Ct. Nassau Cty, 1st Dist., November 23, 2010).

For more on Baum, see:

• Long Island Judge Smacks Upstate NY Foreclosure Mill w/ $5K In Fines, Order To Pay $15K+ Legal Fees To Lawyer For Foreclosed-Upon Homeowner,
• NY Trial Judge: Buffalo-Based Foreclosure Mill Law Firm's Actions "A Dereliction Of Professional Responsibility!"