NY Law Firm Hit With $2 Million Fine for Foreclosure Irregularities

A New York State law firm has agreed to pay a $2 million fine and revise its practices to settle federal charges that it filed misleading pleadings, affidavits and mortgage assignments in state and federal courts.

Steven J. Baum, P.C., of Amherst, NY, will implement a series of internal controls including a pledge not to bring foreclosure actions without reviewing the original promissory notes or reviewing a copy of the note from its client or custodian of the document.

There have been numerous instances around the country of law firms foreclosing on consumers' homes without ascertaining that they actually had possession of all the relevant documentation.

The action against Baum was taken by the U.S. Attorney's Office for the Southern District of New York.

No excuses

"In mortgage foreclosure proceedings, there are no excuses for sloppy practices that could lead to someone mistakenly losing their home," Southern District U.S. Attorney Preet Bharara said in a statement. "Homeowners facing foreclosure cannot afford to have faulty paperwork or inadequate evidence submitted, and today's agreement will help minimize that risk."

The 12-page agreement also prohibits the firm's employees from executing mortgage assignments as officials or representatives of MERS, an electronic mortgage registry system.

After paying its fine, the Baum firm, which has 87 attorneys, will be released from potential civil claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989.