Steven J. Baum P.C.

Last updated

Steven J. Baum P.C.
Steven J Baum PC logo.png
Headquarters Amherst, NY
No. of offices2
No. of lawyers14 [1]
No. of employees89
Major practice areasReal estate
Key peopleSteven J. Baum
Date founded1972
FounderMarvin R. Baum
Company type Professional corporation
Dissolved2011
Website www.mbaum.com/SJB/index.jsp

Steven J. Baum, P.C., was a law firm headquartered in Amherst, New York, United States. It was founded as Marvin R. Baum, P.C. in 1972, and remained under that name until Marvin Baum's death in 1999, after which his son Steven inherited the business and renamed it after himself. Its practice was primarily in real estate law, particularly in representing lenders and servicers in residential foreclosure actions in its later years.

Contents

In the wake of the subprime mortgage crisis in the late 2000s (decade), Baum handled 40% of all foreclosures in the state, the most of any law firm in New York. Many of the foreclosures it initiated were products of the robo-signing scandal, and it came under state and federal scrutiny. Homeowner activists singled out the firm for its aggressive tactics that ruled out mortgage modifications, and brought class action suits against it. After state courts instituted a rule designed to curtail fraudulent foreclosure filings, a rule the firm had fought in court, new filings by Baum's clients dropped considerably.

The firm came to national attention in 2011 when New York Times columnist Joseph Nocera published photos from the firm's Halloween party the previous year, leaked to him by an employee. They depicted costumes and decoration that mocked homeowners and critics of the firm. Shortly afterwards, Fannie Mae and Freddie Mac barred lenders and servicers from using the firm for foreclosures. State and federal investigations are continuing. Within a week Baum announced it was closing the firm, citing the negative publicity and lost business. [2]

History

Marvin R. Baum founded the firm in 1972. In addition to practicing law in the foreclosure area, he wrote and lectured on the topic and real estate law in general. He chaired the Real Property Law Section of the New York State Bar Association (NYSBA). [3]

His son Steven J. Baum joined the firm in 1986. He chaired the Foreclosure and Workout Committee of the NYSBA. In 1999, when his father died, the firm assumed his name. [3] Shortly afterwards, an associated firm, Pillar Processing LLC, was created to handle document processing. It was later spun off to private equity investors, but was dependent on Baum for almost all its business. [2]

2000s: role in foreclosures and closing

Following the subprime mortgage crisis of the late 2000s (decade), foreclosures, originally just one aspect of the firm's business, became its primary business. It became the largest foreclosure firm in the state, involved in 40% of all actions in New York. [4] It opened a satellite office on Long Island, in Westbury, to handle the extra business. Many lawyers for homeowners and consumer activists derisively referred to Baum as a "foreclosure mill", and it was investigated by the state and federal governments for its role in the robo-signing scandal, in which forged documents were filed to initiate actions on behalf of clients who may not have been the original lenders or servicers. A Brooklyn judge said Baum operated "in a parallel mortgage universe, unrelated to the real universe". [5]

The firm later paid the Department of Justice $2 million, and agreed to change its practices, to settle the claims brought against it by Preet Bharara, U.S. Attorney for the Southern District of New York. It admitted no wrongdoing beyond "occasionally [making] inadvertent errors in its legal filings in state and federal court." [6] In October 2010, the state's chief administrative judge imposed a rule requiring clients to affirm the original documents under penalty of perjury. It limited the company's business, and Baum later argued in court that it should be reversed as unconstitutional. [7] The affirmation rule had an adverse effect on homeowners against whom foreclosure notices had been filed: without it, no mediation efforts could begin, and interest and fees continued to accrue, eroding the homeowner's eventual bargaining position.

Baum came to national attention around Halloween 2011, when Joseph Nocera, a columnist at The New York Times , published photographs taken at the firm's Halloween party the previous year that had been sent to him by an employee. The employees were dressed like homeless or poor people, and wore signs around their necks saying things like "3rd Party Squatter – I Lost My Home & I Was NEVER Served", a common response to foreclosure proceedings. Another image depicted a row of mock houses identified as "Baum Estates" with foreclosure notices in front, and a third display imagined the death of a Manhattan attorney who had filed a class action suit against the firm. "There is this really cavalier attitude," Nocera quoted his source as saying. "It doesn't matter that people are going to lose their homes." A spokesman for the firm called the column "another attempt by The New York Times to attack our firm and our work." [5]

The firm apologized after the ensuing uproar, [8] but the controversy did not end. Occupy Buffalo picketed the firm's offices, [4] and urged state attorney general Eric Schneiderman, who had been investigating the firm, [9] to prosecute rather than settle. Both Fannie Mae and Freddie Mac barred servicers from using the firm. [10] Investigations by the United States House of Representatives were also underway.

Three weeks later, Nocera wrote a follow-up column that began by quoting an email he had received from Baum: "You have destroyed everything and everyone related to Steven J. Baum PC. It took 40 years to build this firm and three weeks to tear down," he said. He had asked about Baum's effort to have the affirmation rule overturned. Baum told him that the firm was merely following the wish of one its client servicers, and that the rule was simply "confusing." In a final email, Nocera quoted Baum as saying, "There is blood on your hands for this one, Joe. I will never, ever forgive you for this." [11] Two days later, Baum announced that the firm would close down due to the business lost by the Fannie and Freddie ban. [2]

In March 2012, after the firm closed down, Baum reached a settlement for $4 million (~$4.73 million in 2021) with the State of New York over abuses in their legal work, without admitting any wrongdoing. [12]

Related Research Articles

The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the New Deal, the corporation's purpose is to expand the secondary mortgage market by securitizing mortgage loans in the form of mortgage-backed securities (MBS), allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on locally based savings and loan associations. Its brother organization is the Federal Home Loan Mortgage Corporation (FHLMC), better known as Freddie Mac. In 2023, Fannie Mae was ranked number 28 on the Fortune 500 rankings of the largest United States corporations by total revenue.

<span class="mw-page-title-main">Foreclosure</span> Legal process where a lender recoups an unpaid loan by forcing the borrower to sell the collateral

Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

<span class="mw-page-title-main">Freddie Mac</span> GSE entreprise

The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise (GSE), headquartered in Tysons, Virginia. The FHLMC was created in 1970 to expand the secondary market for mortgages in the US. Along with the Federal National Mortgage Association, Freddie Mac buys mortgages, pools them, and sells them as a mortgage-backed security (MBS) to private investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases. The name "Freddie Mac" is a variant of the FHLMC initialism of the company's full name that was adopted officially for ease of identification.

<span class="mw-page-title-main">Mortgage-backed security</span> Type of asset-backed security

A mortgage-backed security (MBS) is a type of asset-backed security which is secured by a mortgage or collection of mortgages. The mortgages are aggregated and sold to a group of individuals that securitizes, or packages, the loans together into a security that investors can buy. Bonds securitizing mortgages are usually treated as a separate class, termed residential; another class is commercial, depending on whether the underlying asset is mortgages owned by borrowers or assets for commercial purposes ranging from office space to multi-dwelling buildings.

<span class="mw-page-title-main">2000s United States housing bubble</span> Economic bubble

The 2000s United States housing bubble was a real-estate bubble affecting over half of the U.S. states. It was the impetus for the subprime mortgage crisis. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reached new lows in 2011. On December 30, 2008, the Case–Shiller home price index reported the largest price drop in its history. The credit crisis resulting from the bursting of the housing bubble is an important cause of the Great Recession in the United States.

The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis. The crisis led to a severe economic recession, with millions of people losing their jobs and many businesses going bankrupt. The U.S. government intervened with a series of measures to stabilize the financial system, including the Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Act (ARRA).

<span class="mw-page-title-main">Residential mortgage-backed security</span>

Residential mortgage-backed security (RMBS) are a type of mortgage-backed security backed by residential real estate mortgages.

The subprime mortgage crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. It includes United States enactment of government laws and regulations, as well as public and private actions which affected the housing industry and related banking and investment activity. It also notes details of important incidents in the United States, such as bankruptcies and takeovers, and information and statistics about relevant trends. For more information on reverberations of this crisis throughout the global financial system see Financial crisis of 2007–2008.

The Hope Now Alliance is a cooperative effort between the US government, counselors, investors, and lenders to help homeowners who may not be able to pay their mortgages. Created in 2007 in response to the subprime mortgage crisis, the alliance claims to have helped over 1 million homeowners avoid foreclosure through January 2008. Critics of the alliance contend that the assistance provided does not go far enough, and that not enough homeowners are being helped.

<span class="mw-page-title-main">Timeline of the 2000s United States housing bubble</span>

Housing prices peaked in early 2005, began declining in 2006.

<span class="mw-page-title-main">Causes of the 2000s United States housing bubble</span>

Observers and analysts have attributed the reasons for the 2001–2006 housing bubble and its 2007–10 collapse in the United States to "everyone from home buyers to Wall Street, mortgage brokers to Alan Greenspan". Other factors that are named include "Mortgage underwriters, investment banks, rating agencies, and investors", "low mortgage interest rates, low short-term interest rates, relaxed standards for mortgage loans, and irrational exuberance" Politicians in both the Democratic and Republican political parties have been cited for "pushing to keep derivatives unregulated" and "with rare exceptions" giving Fannie Mae and Freddie Mac "unwavering support".

<span class="mw-page-title-main">Federal takeover of Fannie Mae and Freddie Mac</span> Action by the U.S. Treasury to lessen the subprime mortgage crisis

In September 2008 the Federal Housing Finance Agency (FHFA) announced that it would take over the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Both government-sponsored enterprises, which finance home mortgages in the United States by issuing bonds, had become illiquid as the market for those bonds collapsed in the subprime mortgage crisis. The FHFA established conservatorships in which each enterprise's management works under the FHFA's direction to reduce losses and to develop a new operating structure that will allow a return to self-management.

The U.S. subprime mortgage crisis was a set of events and conditions that led to a financial crisis and subsequent recession that began in 2007. It was characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages. Several major financial institutions collapsed in September 2008, with significant disruption in the flow of credit to businesses and consumers and the onset of a severe global recession.

<span class="mw-page-title-main">Peter J. Wallison</span> American attorney

Peter J. Wallison is an American lawyer and the Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute. He specializes in financial markets deregulation. He was White House Counsel during the Tower Commission's inquiry into the Iran Contra Affair. He was a dissenting member of the 2010 Financial Crisis Inquiry Commission, frequent commentator in the mass media on the federal takeover of Fannie Mae and Freddie Mac and the financial crisis of 2007–2008 and wrote Hidden in Plain Sight (2015) about the crisis and its legacy.

Loan modification is the systematic alteration of mortgage loan agreements that help those having problems making the payments by reducing interest rates, monthly payments or principal balances. Lending institutions could make one or more of these changes to relieve financial pressure on borrowers to prevent the condition of foreclosure. Loan modifications have been practiced in the United States since the 1930s. During the Great Depression, loan modification programs took place at the state level in an effort to reduce levels of loan foreclosures.

The 2010 United States foreclosure crisis, sometimes referred to as Foreclosure-gate or Foreclosuregate, refers to a widespread epidemic of improper foreclosures initiated by large banks and other lenders. The foreclosure crisis was extensively covered by news outlets beginning in October 2010, and several large banks—including Bank of America, JP Morgan, Wells Fargo, and Citigroup—responded by halting their foreclosure proceedings temporarily in some or all states. The foreclosure crisis caused significant investor fear in the U.S. A 2014 study published in the American Journal of Public Health linked the foreclosure crisis to an increase in suicide rates.

Mortgage Electronic Registration Systems, Inc. (MERS) is an American privately held corporation. MERS is a separate and distinct corporation that serves as a nominee on mortgages after the turn of the century and is owned by holding company MERSCORP Holdings, Inc., which owns and operates an electronic registry known as the MERS system, which is designed to track servicing rights and ownership of mortgages in the United States. According to the Department of the Treasury, the Board of Governors of the Federal Reserve, The Federal Deposit Insurance Corporation and the Federal Housing Finance Agency, MERS is an agent for lenders without any reference to MERS as a principal. On October 5, 2018, Intercontinental Exchange and MERS announced that ICE had acquired all of MERS.

A mortgage servicer is a company to which some borrowers pay their mortgage loan payments and which performs other services in connection with mortgages and mortgage-backed securities. The mortgage servicer may be the entity that originated the mortgage, or it may have purchased the mortgage servicing rights from the original mortgage lender. The duties of a mortgage servicer vary, but typically include the acceptance and recording of mortgage payments; calculating variable interest rates on adjustable rate loans; payment of taxes and insurance from borrower escrow accounts; negotiations of workouts and modifications of mortgage upon default; and conducting or supervising the foreclosure process when necessary.

<span class="mw-page-title-main">Occupy Buffalo</span> American protest movement

Occupy Buffalo was a collaboration that included a peaceful protest and demonstrations which began on October 1, 2011, in Buffalo, New York, in Niagara Square, the nexus of downtown Buffalo opposite the Buffalo City Hall. It is related to the Occupy Wall Street movement that began in New York City on September 17, and called for economic equity, accountability among politicians and ending lobbyist influence of politicians. Protesters camped overnight in Niagara Square as part of the demonstration.

The Home Affordable Refinance Program (HARP) is a federal program of the United States, set up by the Federal Housing Finance Agency in March 2009, to help underwater and near-underwater homeowners refinance their mortgages. Unlike the Home Affordable Modification Program (HAMP), which assists homeowners who are in danger of foreclosure, this program benefits homeowners whose mortgage payments are current, but who cannot refinance due to dropping home prices in the wake of the U.S. housing market correction.

References

  1. ↑ "Steven J. Baum, P.C." Martindale–Hubbell. 2011. Retrieved November 21, 2011.
  2. 1 2 3 Epstein, Jonathan (November 21, 2011). "Baum foreclosure law firm closing". The Buffalo News. Retrieved November 21, 2011.
  3. 1 2 "About us". Steven J. Baum P.C. Retrieved November 21, 2011.
  4. 1 2 Epstein, Jonathan (November 15, 2011). "Occupy Buffalo protesters picket at Baum law office". The Buffalo News . Retrieved November 21, 2011.
  5. 1 2 Nocera, Joseph (October 29, 2011). "What the Costumes Reveal". The New York Times . Retrieved November 21, 2011.
  6. ↑ "Manhattan U.S. Attorney Announces Agreement With Mortgage Foreclosure Law Firm To Overhaul Its Practices And Pay $2 Million Fine" (PDF) (Press release). United States Attorney for the Southern District of New York. October 6, 2011. Retrieved November 21, 2011.
  7. ↑ Epstein, Jonathan (November 8, 2011). "Foreclosure law firm is battling rule on accuracy". The Buffalo News. Retrieved November 21, 2011.
  8. ↑ Glynn, Matt (October 30, 2011). "Law firm says party was 'poor taste'". The Buffalo News. Retrieved November 21, 2011.
  9. ↑ Morgenson, Gretchen (April 9, 2011). "New York Subpoenas 2 Foreclosure-Related Firms". The New York Times. Retrieved November 21, 2011.
  10. ↑ Weidlich, Thomas (November 18, 2011). "Fannie Mae, Freddie Mac Ban Baum Firm From New Foreclosures". Bloomberg News . Retrieved November 21, 2011.
  11. ↑ Nocera, Joseph (November 19, 2011). "Baum Weighs In After Uproar". The New York Times. Retrieved November 21, 2011.
  12. ↑ Weidlich, Thom (March 22, 2012). "Baum Foreclosure Firm Settles With New York for $4 Million".
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.