Monday, November 21, 2011

Fannie Joins Freddie In Bouncing Baum From Future Foreclosures; Firm That Mocked Homeowners At Halloween Party On Embarrassing Road To Unraveling

In Buffalo, New York, The Buffalo News reports:

  • Steven J. Baum PC has suffered another blow, as Fannie Mae joined Freddie Mac in barring the Amherst law firm from getting any new foreclosure or other legal business from lenders servicing mortgages for the giant federally backed company. According to an updated version of Fannie Mae's "Retained Attorney List," dated Nov. 15, Baum's law firm is "not eligible for new referrals."


  • The action by Washington, D.C.-based Fannie Mae, the nation's dominant player in the mortgage industry with a $2.8 trillion book of business, follows on the heels of a similar step late last week by Freddie Mac, the No. 2 player with $2.1 trillion.

  • The impact of being banned by the federal mortgage giants can be devastating for a foreclosure firm. The last time a law firm such as Baum was banned from both Fannie Mae and Freddie Mac involved Florida lawyer David J. Stern. Other major servicers quickly followed suit in withdrawing their business from Stern. That firm is now virtually out of business, with just a skeleton crew wrapping up a few matters and handling lawsuits against its former lender clients.


  • "It is not surprising to see Fannie Mae suspend Steven Baum's firm after the announcement from Freddie Mac last week," said Rebecca Case-Grammatico, an attorney at Empire Justice Center in Rochester. "It is interesting to witness the unraveling of such a large player in New York's foreclosure field."

  • "It was expected Fannie and Freddie would dump Mr. Baum," said Susan Chana Lask, a New York City attorney who sued Baum on behalf of a client last year, fought off a defamation suit by Baum and was depicted in photos of Baum employees lampooning foreclosure victims at a company Halloween party last year. Those photos recently emerged into the national spotlight, and may have triggered some of actions against the firm. "How much more embarrassing can he be to the banking industry?," Lask said.


  • The firm has been at the center of the foreclosure controversy over "robo-signing," and has been accused by consumers, consumer advocates, other attorneys and even judges of submitting sloppy and perhaps fraudulent paperwork riddled with legal errors.

  • The firm is currently challenging as unconstitutional a new state rule requiring foreclosure attorneys to affirm, under penalty of perjury, that the documents they submit are accurate.

  • It agreed a few weeks ago to pay a $2 million fine and change its practices under a settlement with the U.S. Attorney Preet S. Bharara in Manhattan, capping a probe by the U.S. Justice Department. It's currently under investigation by New York Attorney General Eric T. Schneiderman, who has issued subpoenas to the firm and those associated with it. It has also been sued several times in class-action cases.

For the story, see Fannie Mae hits Baum firm with ban (Foreclosure specialist no longer gets referrals).

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