NY Foreclosure Process Could Grind To A Halt Due To Imminent Closure Of Upstate Sweatshop

The New York Post reports:

• The implosion of the foreclosure-mill law firm of Steven J. Baum has thrown close to 10,000 New York families into legal limbo. Baum announced last week that he was closing the firm after Fannie Mae and Freddie Mac, the government-run mortgage organizations, said the law firm was no longer eligible to handle foreclosures.



• The Baum firm, which is located in Buffalo, with a second office in Westbury, Long Island, notified the New York Department of Labor that all 67 employees would be laid off in mid-February. (By law, any firm has to give employees 60 days notice when issuing mass layoffs.)



• Last week, along with the Baum firm announcing its closure notice, Fannie Mae sent a directive that mortgage servicers are authorized to transfer Fannie Mae foreclosure or bankruptcy matters from Baum to any other retained attorney network firm in New York.



• Baum’s folding is the second default-services firm to cease foreclosure operations in the wake of last fall’s robo-signing scandal and the investigations it spawned. In March, the David J. Stern law firm in Plantation, Fla., one of the largest foreclosure mills in the nation, ceased foreclosure work.



• While some court observers speculate that, with the Baum firm’s closure, thousands of court cases will proceed with new counsel, that was not the case with the Stern shutdown. Many smaller firms picking up the Stern foreclosure cases could not get the needed paperwork to proceed because Stern placed liens on the paperwork in order to be paid for services it has already rendered.



• Sources familiar with the Florida backlog say that delays in foreclosure cases are still occurring due to the ongoing paper chase. One attorney, who wishes not to be quoted directly due to having matters against these firms, suggested that other large foreclosure firms — which are the only ones to take on this size caseload — would be leery to step into the void left by Baum’s closure.



• Another defense attorney said there has been radio silence from the Baum firm since the beginning of this month, despite numerous calls and e-mails sent to find out about pending foreclosure cases against their clients.



• Many of the Baum lawyers were tied up with non-compete clauses in their contracts, so it’s unclear whether they can move to other firms now or have to wait until the planned shutdown next year.



• In May, New York Attorney General Eric Schneiderman launched an investigation into the Baum firm; the AG’s office issued subpoenas, and at the time it was reported that the firm said it was fully cooperating. It is unclear whether criminal charges will result from the AG’s probe.

Source: Baum fall throws NY foreclosures a curve.