March 27, 2012

Foreclosure Actions and Professional Responsibility

Recently, the New York State law firm of Steven J. Baum P.C. agreed to pay $4 million in fines and penalties after admitting that it failed to verify the accuracy of court documents filed by their firm in foreclosure matters.

According to the article, many have criticized the settlement as being too lenient. Baum's office was the major law firm in New York State in representing banks and other institutional lenders in foreclosure actions. They filed more than 4,000 foreclosure cases in Westchester, Rockland, and Putnam Counties since 1999 and more than 100,000 cases statewide between 2007 and 2010. Clearly, the sheer volume of cases filed by a single law firm should have raised a red flag with the Courts or the clients at issue over that firm's ability to properly handle such a large number of foreclosure cases, which require a large amount of detail-oriented paperwork, and, in the case of residential foreclosures, many Court appearances.

This author's own experiences with the Baum Law Firm were that their attorneys were almost impossible to reach by telephone, making it difficult to resolve matters without the need for unnecessary Court appearances. When in Court, Baum's office often sent attorneys who lacked authority to resolve matters on behalf of the bank clients, which further delayed cases.

It is important that a client who seeks foreclosure of property hire an attorney who will personally attend to the matter. Baum's firm admitted to "robo-signing" various Court documents. To explain what this means, in any legal action, the client is required to review the pleadings being filed on their behalf, and sign a verification stating that to the best of their knowledge, or based on records which they have personally reviewed, the allegations in the court documents are correct.

In the case of the Baum Law Firm, probably due to the sheer volume of cases which they attempted to handle, the pleadings filed were not reviewed for accuracy by the client, and many verifications was "signed" by computer. For this reason, many cases may have been brought in error, or with inaccurate facts in the Complaint or in subsequent motions. This harmed all parties in the foreclosure process. The homeowner was forced to defend allegations in Court which may have been incorrect. The banks that hired the Baum Law Firm were not able to get the results that they sought due to the inaccurate pleadings filed. Overall, the disposition of properties remained uncertain, further harming the already weak real estate market. Many of these cases have now been assigned to other law firms, but still remain unresolved, further clogging the Court system.

As any firm should, our law firm reviews all pleadings carefully before filing with the Court. In addition, all pleadings which are required to be verified are sent to the client for review, and, if necessary, corrections. Assuming the allegations are accurate, the client then personally signs the verification and has the verification notarized. Therefore, we are confident that any Court proceeding will not be delayed due to inaccurate or incorrect information contained in the Court documents filed. This should be standard procedure for any law firm engaged in foreclosure work. Hopefully, the banks that engage law firms for foreclosures will be more diligent in the future regarding review of pleadings. Having a large volume of cases to litigate is not an excuse for taking shortcuts with the legal system, as the demise of the Baum Law firm demonstrates.