Foreclosure Law Firm, Vilified for Making Fun of Homeless, Now Attacks Constitutionality of New Rules to Assure It Verifies Court Documents

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To quote the immortal Forrest Gump, stupid is as stupid does. The biggest New York foreclosure mill, the Steven J. Baum law firm, is a textbook example. The New York Times’ Joe Nocera obtained photos from its 2010 Halloween party from a recently departed employee, who said they were consistent with the firm’s disdain for homeowners at the end of their economic rope who faced eviction. As Nocera wrote:

These pictures are hardly the first piece of evidence that the Baum firm treats homeowners shabbily — or that it uses dubious legal practices to do so. It is under investigation by the New York attorney general, Eric Schneiderman. It recently agreed to pay $2 million to resolve an investigation by the Department of Justice into whether the firm had “filed misleading pleadings, affidavits, and mortgage assignments in the state and federal courts in New York.” (In the press release announcing the settlement, Baum acknowledged only that “it occasionally made inadvertent errors.”)…

I saw the firm operate up close when I wrote several columns about Lilla Roberts, a 73-year-old homeowner who had spent three years in foreclosure hell. Although she had a steady income and was a good candidate for a modification, the Baum firm treated her mercilessly

The article produced a hue and cry and led to official follow up. Representative Elijah Cummings, who launched an investigation of servicer abuses earlier this year, had asked the Inspector General of the Federal Housing Finance Agency to investigate allegations foreclosure mills, including Baum. As a result of the Nocera article, Cummings sent a letter to the firm demanding all documents related to possible foreclosure abuses, as well as ” preparing for, carrying out, or communicating about the firm’s 2010 Halloween party.”

So you’t think the firm would lay low for a while, right? Wrong. Readers may recall that last October, New York implemented a requirement that all attorneys in residential foreclosures certify that they take “reasonable” measures to verify the accuracy of documents submitted to the court. From a formal standpoint, all this did was reaffirm existing law, but procedurally, it makes it much easier for borrower’s counsel to get attorneys who play fast and loose sanctioned.

Look what has happened to foreclosure activity before the requirement was put in place versus this past October:

Now imagine what this means to a firm like Baum. No foreclosures means no fees which means they might wind up like those homeless people they made fun of last year. So in a pretty desperate gambit, the firm is trying to challenge the rule on Constitutional grounds.

Reading between the lines of the story in the Buffalo News, this appears to be a Hail Mary pass. Key extracts:

The Baum firm wants a state court in Buffalo to overturn a statewide administrative rule, which the firm contends is impeding the rights of its bank and mortgage servicing clients, and intruding on the power of the local court.

The Amherst firm’s attorneys describe a “procedural” but illegal regulation as the only remaining barrier to having the Black Rock home of Shauna M. Foster seized and sold at public auction to satisfy a debt.

“This creates a procedural hurdle [that] prevents them from going to sale,” said Baum attorney Tracy M. Fourtner. “My client’s statutory remedy is being impaired. . . . The only thing that is holding up the plaintiff’s right is this order.”

The firm doesn’t say why it can’t or won’t comply with the rule.

Needless to say, the idea that a law firm refusing to say it has met requirements of plaintiffs in residential cases is not getting a sympathetic hearing:

Lawyers for the state insist that Chief Administrative Judge Ann T. Pfau was well within her right under the State Constitution and laws when she issued her regulation “to curb documented widespread abuses in mortgage foreclosure proceedings,” according to a legal brief by Laura Etlinger, the state’s assistant solicitor general. She said identical or similar rules are in effect in other states..

The lawyers for both sides faced pointed questioning by State Supreme Court Justice Timothy J. Walker, who said he was also on a statewide judicial committee that helped draft the rule.

“Are the courts supposed to rubber-stamp the filings, to . . . just sign off?” Walker asked. “How can the court rely on good faith, knowing what the court knows of robo-signing?”

He noted that lawyers have long had an obligation to bring problems with documentation to the court’s attention when they discover it in a pending case. But he said that never happened in New York with foreclosures.

I don’t think this is going to turn out well for the Baum firm. Maybe someone should throw a party, but that would be stooping to their level.

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  1. LucyLulu

    I’ve always wondered about this ruling, not that I have any sympathy for the lenders. What is considered “reasonable measures” for an attorney to take to verify the accuracy of documents. Obviously, if an attorney knows documents are forgeries or fraudulent, they are ethically bound not to submit them. However, if their client gives them, e.g., a promissory note, and tells them it is the original, can they take their client’s word for it, if the note upon inspection, looks okay? If not, what do they have to do to verify its authenticity vs. a forgery?

    I’m thinking about other types of law. In divorces, (okay, been there), attorneys take their client’s word that documents are accurate and do nothing to verify them. I can attest that what they receive is utter bs, doesn’t even look authentic. Judges don’t seem to care either. (Really pissed me off though.) I’m pretty sure it’s par for the course. In criminal trials, defense attorneys will put their (guilty) clients on the stand to testify about their alibi, as long as they have no outright evidence their client is lying (irregardless of suspicions). IOW, while they are ethically bound not to suborn perjury, it doesn’t seem like attorneys go out of their way to confirm clients are being truthful. Is this an accurate representation?

    1. Maria reads

      My understanding from Yves’ previous posts is that it is considered ‘bad form’ for a defendant’s attorney to challenge the accuracy of affidavits (that is robo-signing or whole-sale fabrication) in court. This so-called procedural hurdle gives the defendant’s attorneys breathing room to challenge fabricated documents and puts the onus on the plaintiff’s attorney (at risk of disbarment) to certify that the documents in question are not fabrications. The case in question in the article — where the attorney can’t clear the procedural hurdle — must rely on MERS or robo-signing, or whole-sale fabrication of lost or destroyed documents required to complete a legal foreclosure.

      1. sleeper

        Re: Lawyers / Bar Associations

        Folks, while the general public can does and should complain to the local bar association, chances of such a complain actually being taken seriously are slim.

        There are several reasons for this – the bar association is a semiprivate professional association which generally has some disciplinary fuctions but it is paid for by fees from it’s members. This is bitting the hand that feeds you.

        Note that it is pretty rare for any professional association be it doctors, lawyers, engineers and so on to actually discipline it’s members. These generally are good old boys clubs with a real reluctance to take action. Sometimes I think this is a sort of group dynamic or some kind of tribal behavior – ” He maybe a son of a b*tch but he’s our son of a b*tch.”

        So what to do ?

        Complain vigorously, officially, and often to hold these hack’s feet to the fire. If nothing else it is free or cheap and it will slowly tie the lawyers up it knots of their own making.

        1. Cheyenne

          You might want to mention that committing fraud on the court–for example by falsely inducing a court to hear a case, via forgeries and perjured affidavits, where the court lacks jurisdiction–is a crime so severe that it carries no statute of limitations.

          Or you could point out that every single foreclosure judgment rendered where the plaintiff lacked standing and the court thus lacked jurisdiction is void as a matter of law, and is thus wide open to collateral attack in subsequent judicial proceedings.

          But who cares about black letter law any more? Certainly not most lawyers–at least not until a judge yanks a law license or 2.

          1. Lloyd Blankstein

            Can anyone explain to me why all these foreclosure-mill legal firms are all Jewish firms? Are they overly represented among the foreclosure-mill firms, or are they the ones being reported by Yves?

        2. Moopheus

          Actually, complaints against lawyers are handled in the court system and not directly by the Bar Association. Here in Mass., the Board of Bar Overseers is overseen by the SJC, and I believe in New York, it’s part of the Appellate Division. Of course lawyers will be involved, but they can actually take action; some lawyers do end up getting suspended or disbarred.

    2. Yearning To Learn

      I think ther is a difference with RE law compared to the others you state. In our current morass the lying is so pervasive that the public has taken notice. In the end judges will try to at least maintain the fiction of rule of law, as they did here. If widespread obvious and reported fraud were allowed to continue like this then the courts would unravel quickly.

      In sum, there is a difference between millions of low profile law cases with a he said she said outcome, and millions of high profile cases that end with people having proof that they were foreclosed on a house with no mortgage.

    3. PL

      I believe there are many instances where bank attorneys know documents are forgeries or robosigned but submit them to court anyway. For example, when attorneys handle multiple cases for the same servicer–let’s call it GMAX–and know its employees in the default department. If the attorney receives an assignment of mortgage executed by a GMAX employee–lets call him “Jim Stefan”– purporting to be vice president of a now defunct bank–let’s say “LaValle Bank,” that should send up a red flag. An ethical attorney would ask Mr. Stefan whether he has signing authority for LaValle, review the document allegedly giving signing authority, and then, if the facts are confirmed, direct him to execute a new document where his job title and signing authority are accurately described “Jim Stefan, GMAX Default Team Employee with signing authority for LaValle Bank”. Instead, the attorney submits the document with misleading job description, because revealing who is actually signing it may raise scrutiny (does this person really have signing authority? does signing authority for a defunct bank continue indefinitely into the future?). The attorney is betting that neither the judge, nor the homeowner or his attorney (if he’s one of the small minority of homeowners who have one) will catch on to the ruse. This situation is typical and there is no doubt that the attorney knows the document is misleading, if not outright false.

      1. Linden

        Very true. The issue, however, is not just that there are lawyers who will lie, but that the banksters have been given a free pass to lie. Prosecuting lawyers without prosecuting banksters is a game of whack-a-mole: there will always be some hack with a law license out there who is willing to make a bundle of money in the short term and risk a possible disbarment that may never occur. Send a thousand or so banksters to jail, however, as was done during the savings and loan crisis, and watch the market for perjured testimony dry up overnight.

    4. Linden

      The idea of having this piece of paper, an affidavit, show up in court instead of the person who made the statement is that if necessary, the person could be called into court to testify out of his own personal knowledge to the facts in the statement, along with the notary who witnessed the signature. Robo-signed affidavits are false because: 1) the person who made the statement often doesn’t exist; 2) if the person does exist, she doesn’t know anything about the statement she supposedly signed; 3) the notary is lying about witnessing the signature.

      The businesses and attorneys involved with these cases are on notice that the information they are presenting is false. They have no reason not to know this, and no excuse to make if they offer it anyway. They are the ones bringing the cases and the burden of proof to produce true evidence of their rights is on them.

    5. Nathanael

      Lucy, it’s worth noting that a great number of the fraudulent documents are really poor fabrications. They start looking suspicious the moment you start looking at them.

      Why doesn’t the signature appear to be a true “wet ink” signature”? Why are the dates wrong? Why are there allonges where there shouldn’t be? Why are various transfers missing? Why are the names of the involved banks wrong? Why are the signatures illegible? Why are they by people with no reason to have any personal knowledge of the matter? Etc.

      The foreclosure mills have, at best, not even been giving the documents the once-over. At worst, they have been paying to have them fabricated (this appears to be the case with one foreclosure mill in Florida which *also* runs a “document fabrication” operation).

      The courts are not asking the plaintiff’s attorneys to go to tremendous lengths to root out fraud, they are simply asking them to do what they should have been doing all along.

  2. LucyLulu

    Also, a comment about the party. Yes, it looks horribly mean. I’ve worked in a terribly stressful environment though, most of my life, on locked inpatient psychiatric units, either adolescent or adult. It’s much like working in an ER, all can be quiet, and 15 minutes later, all hell may have broken loose and it will be hours before you can even go to the bathroom. There are staff meetings at the beginning and the end of each shift where the offgoing shift reports to the oncoming shift what has been going on, for the sake of continuity of care. There were many a time where those meetings would degenerate into joking, sometimes making fun of patients. We would have been horrified and felt terrible if the patients or families had overheard us. Everybody there was VERY dedicated to their work, loved their jobs, and cared deeply about our clients, as evidenced by our high success rate and satisfaction expressed at discharge. It was our way of dealing with stress. Laughing was easier than crying.

    It has to be a horrible job kicking people out of their homes. I don’t know if that was the dynamics in play at this Halloween party or not, but I have to think it was their way of discharging the stress or distancing themselves or something. It’s hard to imagine all those people could really be so heartless.

    1. patricia

      Interesting comparison. But I think there’re some fundamental differences between the two groups. The staff at an inpatient mental hospital are with their clients throughout every workday. In-your-face distress for the duration. The members of the law firm move paper and occasionally deal with distraught people via phone calls. They “farm out” most of the difficult face-to-face work.

      Mentally ill inpatients are past the edge of rationality. When the staff jokes about them, it is a means of returning mental law-and-order, of rationality to their own lives. A necessary correction.

      Another comparison might see the law firm to be more similar to the inpatients than the staff because they are the ones constantly flaunting law-and-order, acting irrationally towards their society. However, their form of “insanity” destroys people “out there”, and they do it deliberately, therefore they cannot be said to be truly “out of their minds” in the hopeless way that the mentally ill truly suffer.

      Bill Black’s idea of “criminogenic environment” applies well here, I think. In such contexts, “people could really be so heartless”. Sadly, it’s not all that rare. I’ve seen it in the arts, and also in religion (but not law or finance simply because I’ve not worked there). Normally flawed people (and who among us aren’t) give full reign to their flaws when the context not only encourages but requires it. It is the rare human who can continue inside such a system and maintain integrity.

      So yeah, I’m sure those partiers were discharging stress and distancing themselves. But I suspect their reasons had little to do with the reasons mental hospital staff do it.

      1. Skippy

        Yep… Mental health workers in some ways, for some, are checking out their future digs.

        Skippy…Head of department lighting fatty’s shortly after coming home…LOL…seen that!

      2. Yearning To Learn

        An aside…
        Doctors and nurses may at times joke about patients, they are fallible and human. But they better not do it anywhere in the workplace or in public. I’ve worked for several institutions and it’s a good wa to get fired. It’s one thing to privately let off steam, and another to be crass and cruel at a work party.

      3. Nathanael

        “criminogenic environment” is right.

        This is an institutional culture problem. Many of these criminal banks and criminal law firms and so forth have turned into inherently criminal enterprises, where everything they do is based around criminality. A bit like Kellogg Brown Root. They can’t change from within, because it’s a self-reinforcing society of crookedness. The institution must be shut down and broken up, with the ringleaders imprisoned.

        The firms which steered away from defrauding people… well, they’re OK. They missed out on the profits of crime, but the people involved are probably pretty happy that they did so right now. We need to destroy the criminal firms and give the honest firms a chance to revive the economy and the rule of law.

    2. PL

      They are heartless because they are ethically ignorant and only marginally skilled (as evidenced by numerous mistakes in court documents) and therefore desperate for a job. There are few employment opportunities outside of service and they may have student loans or families to support. Craving a respectable job with advancement opportunities, one at a large law firm sounds too good to be true. And it is, because once employed they find themselves in the legal equivalent of a factory mill. Instead of producing fabric, they must create legal documents even though they lack rudimentary knowledge and training, so they make it up as they go along rather than face immediate termination in humiliating circumstances. Read deposition transcripts of former employees of David Stern’s Florida law firm for insight into who works for a foreclosure mill and under what circumstances.

    3. McKillop

      I, too, have worked under great stress caused by the horrible situations of various ‘clients’.
      I’ve also behaved both as a cranky, unsympathetic creature and as an ass, mocking those people who _caused_ the stress.
      In such cases, I’d plead that the immediacy of the stress and the situation might provide a partial excuse.(For me, anyway, for, like many, I think I deserve mercy more than justice.)
      Planning for a costume party, preparing the props, and working together as a gang gleefully to ridicule others seems to be more of a justification for guilty nastiness or, at the worst, simple suckholing to the bosses.

    4. Stupendous Man - Defender of Liberty, Foe of Tyranny

      The Baum firm is knowingly violating statutes, rules of procedure, ethical canons, etc., and is profiting from those actions.

      There are no levels, or no circumstances, in which that kind of behavior is acceptable.

    5. Steve

      Here we have a look at the ‘inside culture’ of what William Black calls “control fraud”. The top-down propaganda and culture-engineering within these crime organizations must be intense (e.g. “We’re true America Patriots… it is our job to destroy the evil lazy scum and their evil enablers the liberal progressives who control our government and media who are destroying our Great Homeland by letting worthless lazy undeserving un-american scum share in Our Greatness”).

      My mother-in-law was in the mortgage underwriting business for decades until a year ago. I sent her detailed articles arguing that the housing bubble was a massive fraud perpetrated by the finance industry and that she had worked within a massive organized crime syndicate. Absolutely nothing gets through her deep programming. She has a rebuttal on every issue… “We all knew what was going on for fifteen years”. “It was the liberal progressives, organized by Bill Clinton, that forced the banks to make loans to total losers”. “Every day we processed those loans… and we knew they were wrong”. “Every day we were totally disgusted at how our own government was forcing us to give money to scum who couldn’t afford a car loan, let alone a house”. On and on she can screech about how it was all the government’s fault and the liberal progressives are pure evil, corrupt, and to blame for everything.

      So now we have the truth: 1) the people working in the mortgage foreclosure mills agree with, enjoy, and are proud of what they’re doing, and 2) the people working in the mortgage origination mills did NOT agree with and hated the government for what they were doing?

      I give up. There’s no arguing back. Her perspective has been supported by essential all formal institutions in our society (e.g. corporate media, presidency, congress, judiciary, state/local government, academia, etc.). She, nor anyone else I know here in Texas, will not even start to consider an alternative explanation.

      If the ‘popularity’ of the 99% concept doesn’t break through these deep lies then I can’t imagine how this country will get itself out of this deep corruption.

      1. ReaderOfTeaLeaves

        In the end it is the banality of so much of this that cloys.
        People acting like mindless automatons, not even asking about the implications of their own actions.
        Of course you mother-in-law will blame Clinton, progressives –she’d probably blame a donut if it enabled her to protect her ego.
        There is a great deal of evil in all the banal processes and procedures that enable people to avoid confronting the consequences of their actions.

  3. R Foreman

    I bet our Congress people wonder why there is so much legal abuse and corruption in financial services, this after having purchased their way onto select committees using money given to them by the industry organizations they’ll be regulating.

    The corrupt practices have become so common they seem normal to the participants. The corruption starts at the top of our socio-economic food-chain, in our government, and then just fans outward in all directions to every industry and business.

    I think the USA has invented a new form of government, where the criminals write the laws and then selectively enforce them.

    1. Blunt

      “The corruption starts at the top of our socio-economic food-chain, in our government, and then just fans outward in all directions to every industry and business.”

      Ya sure ya have that progression right Mr. Foreman? I get the feeling that perhaps the ueber-capitalists decided through their various purchases in Costa Rica, Columbia, China, India and various other locales that they could be very effective means of political enfranchisement for the USA as well. I mean, why do you think we had the Gilded Age and the reaction to that during the Progressive Era?

      The fact remains that capitalism vaunts and values greed and ruthless bidniz over any other morality available. Let me suggest that the greed and lying and unsociability then fans out to the government, neighborhoods and individuals.
      Not the reverse direction, although arguing about the primacy of chickens or eggs seems rather scholastic, no?

      The system is corrupt and needs tearing down and grinding to dust so that it never ever returns. That’s the bottom line.

      #Occupy Your Soul

  4. stevelaudig

    Why hasn’t the New York Attorney disciplinary committee [or whatever its correct name is] been alerted to this firms persistent frauds on the courts?

      1. Steve

        No. According to William Black, though there were tens of thousands of “criminal referrals” leading up to and during the Savings & Loan crisis, “not a single criminal referral has been made” in this crisis. William Black also points out that “this crises is 70 times larger than the S&L crisis”.

        There’s no better way to understand the extent and mechanisms of corruption destroying our institutions than reading and listening William Black. Michael Hudson provides an explanation of why the Global Mafia’s objectives are (i.e. why they do what they do).

  5. matt weidner

    I am an attorney in Florida who has complained vigorously for years about all the outright fraud at one extreme and sloppiness or inaccuracies on the other. And for complaining, I suffered attacks from the Bar. Among those attorneys that stand up and fight for consumers, we know that we will suffer attacks and persecutions for rocking the boat. The only hope any of us have left is the free press and reporters like Yves continuing to beat the drum….but just look at how much information is out there. How many blogs. How many newspaper and magazine and tv stories. Just think about how old this “crisis” is….and nothing….and I mean nothing has changed at the ground level…the corruption just runs too deep. This must all burn to the ground before it can be rebuilt. There is no tinkering around the edges.

    1. PL

      Matt and a few other attorneys have been brave enough to complain about the fraud and face retribution from the Bar for doing so. Most lawyers don’t want to attack another attorney, even one complicit in fraud, preferring to focus only on the merits of the case. Much forgery and fraud goes unreported for this reason.

    1. McKillop

      A fool or a knave?
      Knaves, despite their apparent cleverness, prove to be fools in the long run.
      ’tis a pity we suffer fools until their folly serves to destroy our best accomplishments.

  6. Praedor

    There is absolutely nothing wrong with “stooping to their level” by throwing a party and making fun of the law firm’s misfortune. It is actually called “poetic justice”, or “JUSTICE”, or can be seen as forcing the other to walk in the shoes of those they gleefully screwed.

    I’d like to see the Baumidiot law firm go out of business, ALL the lawyers lose their homes, get sued into actual poverty, and then disbarred so they cannot ever come back in any form again.


    1. Steve

      Totally agree! In my most optomistic moments I like to think that if only “Justice” would ‘start’ it would explode in popularity and completely overwhelm the corruption. From the top down, all the evil criminals infesting our institutions would be pushed to the very bottom (if not totally removed) from our society! Our society can recover, and can be happy and healthy again, only when Rule-by-Law is retored and the organized criminals are removed. Let there be Justice!

  7. ella

    The Federal Rules of Civil Procedure, many state rules of civil procedure and the Bankruptcy Reform Act of 2005 require attorneys to verify their court filings. Not to mention law against perjury. Additionally, most bar association have rules prohibiting misrepresentation of fact or law to the court and do not tolerate situations where the attorney has not perform some due diligence in their presentations to the court. This rule from what I can see is no different.

    If lying to the court becomes acceptable then the truth finding of our adversarial system will have no meaning.

    1. LucyLulu

      Thank you for that concrete clarification, Ella. I believe that lying HAS become acceptable, at least in this arena. We can only hope there will be more judges like Judge Pfau who will hold attorneys feet to the fire and clean this fraud up.

    2. McKillop

      Yes, but consider the disparagement of law that has come about in these last years:
      the POTUS committing and bragging about torture, “extra-judicial murders, and so on;
      the SCOTUS and its minions flaunting unseemly relations and corrupt rulings, and so on;
      and so on.
      The Rule of Law has turned out to be another marketing slogan.
      I mourn the loss of your once-admirable country. (Or, perhaps, my own naivety).

  8. R.C. Stevens

    Baum’s foreclosure mill is actually owned by a company called Pillar Processing, which was sold to a private equity lender in NYC called Tailwind Capital Partners which sold a piece of the action to something called Ares Capital. Only the attorneys actually work for his law firm. All the rest of his costumed staff work for Pillar. Baum is partners with another foreclosure mill in CT, Hunt Leibert, in Pillar Processing. Those two beauts made millions creating Pillar and selling out to Tailwind. The U.S. Congress launched an investigation of Baum on 11/4/2011 as evidenced by a letter from Rep. Elijah Cummings (D-Md). Hopefully this will lead to the dismantling of these disgraceful law firms.

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