Photos from a former employee of the law firm of Steven J. Baum: Two Steven J. Baum employees mocking homeowners who have been foreclosed on.
This photo is a depiction of Susan Chana Lask, who posted a YouTube video denouncing the firm.
A corner of the Baum office was decorated to look like a row of foreclosed homes.
What is Baum Estates? More foreclosed homes, of course.
O.T.S.C. stands for order to show cause, a last-ditch motion often made by desperate homeowners about to be evicted from their homes.
A "squatter" in Baum Estates.
By JOE NOCERA Published: October 28, 2011
On Friday, the law firm of Steven J. Baum threw a Halloween party. The firm [ http://www.mbaum.com/SJB/index.jsp ( http://www.mbaum.com/ )], which is located near Buffalo, is what is commonly referred to as a “foreclosure mill” firm, meaning it represents banks and mortgage servicers as they attempt to foreclose on homeowners and evict them from their homes. Steven J. Baum is, in fact, the largest such firm in New York; it represents virtually all the giant mortgage lenders, including Citigroup, JPMorgan Chase, Bank of America and Wells Fargo.
The party is the firm’s big annual bash. Employees wear Halloween costumes to the office, where they party until around noon, and then return to work, still in costume. I can’t tell you how people dressed for this year’s party, but I can tell you about last year’s.
That’s because a former employee of Steven J. Baum recently sent me snapshots of last year’s party. In an e-mail, she said that she wanted me to see them because they showed an appalling lack of compassion toward the homeowners — invariably poor and down on their luck — that the Baum firm had brought foreclosure proceedings against.
When we spoke later, she added that the snapshots are an accurate representation of the firm’s mind-set. “There is this really cavalier attitude,” she said. “It doesn’t matter that people are going to lose their homes.” Nor does the firm try to help people get mortgage modifications; the pressure, always, is to foreclose. I told her I wanted to post the photos on The Times’s Web site so that readers could see them. She agreed, but asked to remain anonymous because she said she fears retaliation.
Let me describe a few of the photos. In one, two Baum employees are dressed like homeless people. One is holding a bottle of liquor. The other has a sign around her neck that reads: “3rd party squatter. I lost my home and I was never served.” My source said that “I was never served” is meant to mock “the typical excuse” of the homeowner trying to evade a foreclosure proceeding.
A second picture shows a coffin with a picture of a woman whose eyes have been cut out. A sign on the coffin reads: “Rest in Peace. Crazy Susie.” The reference is to Susan Chana Lask, a lawyer who had filed a class-action suit against Steven J. Baum — and had posted a YouTube video [ http://www.youtube.com/watch?v=E6JEgYs8A-Q ]
denouncing the firm’s foreclosure practices. “She was a thorn in their side,” said my source.
A third photograph shows a corner of Baum’s office decorated to look like a row of foreclosed homes. Another shows a sign that reads, “Baum Estates” — needless to say, it’s also full of foreclosed houses. Most of the other pictures show either mock homeless camps or mock foreclosure signs — or both. My source told me that not every Baum department used the party to make fun of the troubled homeowners they made their living suing. But some clearly did. The adjective she’d used when she sent them to me — “appalling” — struck me as exactly right.
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 [ http://www.nytimes.com/2011/04/09/business/09foreclose.html?_r=1 ], Eric Schneiderman. It recently agreed to pay $2 million [ http://www.appellate-brief.com/images/stories/PDF/10-6-11USAttyPR.pdf ] 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.”)
MFY Legal Services [ http://www.mfy.org/ ], which defends homeowners, and Harwood Feffer [ http://www.hfesq.com/ ], a large class-action firm, have filed a class-action suit claiming that Steven J. Baum has consistently failed to file certain papers that are necessary to allow for a state-mandated settlement conference that can lead to a modification. Judge Arthur Schack [ http://www.nycourtsystem.com/applications/judicialdirectory/Bio.php?ID=7029077 ] of the State Supreme Court in Brooklyn once described Baum’s foreclosure filings as “operating in a parallel mortgage universe, unrelated to the real universe.” (My source told me that one Baum employee dressed up as Judge Schack at a previous Halloween party.)
I saw the firm operate up close when I wrote several columns about Lilla Roberts [ http://www.nytimes.com/2010/12/04/business/04nocera.html ], 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.
When I called a press spokesman for Steven J. Baum to ask about the photographs, he sent me a statement a few hours later. “It has been suggested that some employees dress in ... attire that mocks or attempts to belittle the plight of those who have lost their homes,” the statement read. “Nothing could be further from the truth.” It described this column as “another attempt by The New York Times to attack our firm and our work.”
I encourage you to look at the photographs with this column on the Web [above]. Then judge for yourself the veracity of Steven J. Baum’s denial.
By Matt Glynn NEWS STAFF REPORTER Published: October 30, 2011, 12:00 AM Updated: October 30, 2011, 6:25 AM
An Amherst law firm that specializes in foreclosures apologized Saturday for just-published photos of costumes worn by employees at a 2010 office Halloween party that were criticized as insensitive toward people who were losing their homes.
Photos of the party ran online with a New York Times column [above] about Steven J. Baum PC, the state’s largest foreclosure law firm. The firm has previously drawn fire for its business practices and is under investigation by the state Attorney General’s Office.
The Times quoted an unidentified ex-Baum employee who emailed columnist Joe Nocera the photos and descriptions of last year’s office Halloween party. Photos posted online included people dressed to look homeless, with one of them holding a sign with a foreclosure-related message; a corner of the office decorated like foreclosed homes; and a sign reading “Baum Estates.”
The head of the firm, Steven J. Baum, said in a statement to The Buffalo News on Saturday that the photos “obviously were in poor taste.”
“On behalf of the firm, I sincerely apologize for what happened last year at our Halloween party,” he said.
Baum said the firm had its Halloween party last week at its various locations, “and we reiterated our company policy as it pertains to wearing appropriate costumes. No one is permitted to wear a costume that could be interpreted as being offensive.”
Baum said this year’s party raised money for the American Red Cross, and he mentioned other fundraising efforts his firm is involved in.
The ex-employee told Nocera that not all Baum departments used the 2010 party to mock homeowners facing foreclosure. But she told Nocera she felt what was in the pictures was “appalling.” [Nocera said he did not have details about this year’s Baum office Halloween party.]
Earlier this month, the firm agreed to pay a $2 million fine and “extensively” overhaul its practices in a settlement with the U. S. Attorney’s Office in Manhattan. The agreement resolved a federal investigation into whether the Baum firm, on behalf of lenders, filed misleading affidavits, mortgage assignments and other documents in state and federal courts.
The Buffalo News in April reported that State Attorney General Eric T. Schneiderman was investigating the firm’s practices. A spokeswoman for the office said Saturday that the investigation is ongoing but declined to comment further.
Nocera’s column had generated 175 reader comments on the Times’ website as of Saturday evening, a mixture of opinions about the pictures and mortgage foreclosures in general.
“I am appalled but find I pity those in these photos,” one reader wrote. “The lack of their empathy and humanity are apparent.”
“The photos are in bad taste but, as it was intended only as an inside joke, I think we need to keep things in context,” another reader wrote. “This picture was never meant for the greater public’s view.”
Baum’s Foreclosure Law Firm Agrees to Pay U.S. $2 Million Over Practices
By Thom Weidlich - Oct 6, 2011 4:24 PM CT
Steven J. Baum’s foreclosure law firm, one of the largest in New York state, will pay the U.S. $2 million and change its practices, including those related to Merscorp Inc.’s mortgage database, to resolve a probe of its foreclosure filings.
The agreement, signed today, resolves an investigation into whether the Baum firm filed misleading pleadings, affidavits and mortgage assignments in courts, according to a statement by U.S. Attorney Preet Bharara in Manhattan. The settlement doesn’t constitute a finding of wrongdoing.
“There are no excuses for sloppy practices that could lead to someone mistakenly losing their home,” Bharara said in the statement. “Homeowners facing foreclosure cannot afford to have faulty paperwork or inadequate evidence submitted, and today’s agreement will help minimize that risk.”
Steven J. Baum PC, located in Amherst, New York, just north of Buffalo, has attracted lawsuits and fines for its actions during the housing crisis. It has been accused of overcharging, filing false documents and representing parties on both sides of a mortgage transfer.
State attorneys general and federal regulators are negotiating with banks including JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) to try to reach a settlement over faulty foreclosure practices in the wake of the financial crisis.
The changes in procedure “go over and above what current law requires,” Baum said in an e-mailed statement. “We will continue to adhere to the highest ethical standards.”
Shares Address
Pillar Processing LLC, which processes foreclosure documents and shares an address with the law firm, is also part of the settlement. Pillar is owned by Manhattan private-equity firm Tailwind Capital LLC, according to its website.
Brooke Gordon, spokeswoman for Tailwind Capital, declined to comment on the settlement.
Baum acknowledged that the firm “occasionally made inadvertent errors in its legal filings in state and federal court, which it attributes to human error in light of the high volume of mortgage defaults and foreclosures,” according to Bharara’s statement.
The agreement calls for the firm’s employees to halt their practice of assigning mortgages as supposed employees of Mortgage Electronic Registration Systems Inc., an electronic database of mortgages.
‘No Connection’
“Until recently, employees of Baum, with the consent of MERS, had been assigning mortgages on behalf of MERS, even though they had no connection to MERS whatsoever,” according to Bharara’s statement.
MERS, a unit of Reston, Virginia-based Merscorp Inc., was set up by the mortgage industry to allow banks to assign and reassign home loans without having to record the changes with county land-records offices.
Janis Smith, a MERS spokeswoman, didn’t have an immediate comment on the MERS allegation.
The agreement calls for the Baum firm to obtain affidavits from clients attesting that they have the original promissory notes or have searched for them, to have experienced attorneys supervise the preparation of documents and to implement a training program for its attorneys.
MERS Assignments
“Borrowers and some courts have been questioning the validity of MERS assignments, pleadings and affidavits from the Baum firm for several years,” Jennifer Sinton, deputy director of the foreclosure-prevention project at South Brooklyn Legal Services, said in an interview. “It’s good to see that Baum is now required to discontinue these practices. Hopefully, this will protect courts and homeowners from bogus foreclosure lawsuits.”
New York State Supreme Court Justice Arthur M. Schack in Brooklyn called the Baum firm’s explanations in one case “so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling.”
Schack threw out the case in part because he said the assignment of the loan by a Baum lawyer on behalf of MERS as nominee of the lender had been done improperly.
The same day, the Baum firm represented the buyer of the loan by filing the foreclosure action, the judge said. Schack said it was a conflict for the firm to represent both sides.
“Steven J. Baum PC appears to be operating in a parallel mortgage universe, unrelated to the real universe,” the judge wrote in that May 2010 decision. “Next stop, the Twilight Zone,” he said, quoting from Serling’s TV series about science fiction and the supernatural.
Baum said last year that in several cases where Schack stated the firm represented both sides in a mortgage transfer, “we have supplied to the court relevant documentation indicating that no conflict of interest existed.”
To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court at tweidlich@bloomberg.net. To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.
PROFITING FROM PAIN Banks Charging The Jobless To Claim Unemployment Benefits
Out of work and living on a $189-a-week unemployment check, Rob Linville needs to watch every penny. Lately, he has been watching too many pennies disappear into the coffers of the bank that administers his unemployment check via a prepaid debit card.
The state of Oregon, where Linville lives, deposits his weekly benefits on a U.S. Bank prepaid debit card. The bank allows him to make four withdrawals per month free of charge. After that, he must pay $1.50 for each visit to the ATM and $3 to see a teller. Managing his basic expenses, including rent, bus fare and groceries, typically requires more than four withdrawals, he says. Unexpected needs -- Linville recently bought a sport coat for $20 to prepare for a job interview -- entail more. He's afraid to withdraw his full benefits in one shot, knowing that the bank could sock him with a $17.50 overdraft fee if he exceeds his balance. So he pulls out small amounts of cash as he needs it, incurring about $15 in fees in the last two months he says.
"I'm so broke," Linville said, his voice expressing resignation that this is simply how the world works. "But I don't really have any other options."
Across the nation, people receiving a range of state-furnished benefits -- from unemployment insurance and food stamps to cash assistance for poor families -- are facing similar options and reaching the same conclusion. In 41 states major banks and financial firms have secured contracts to provide access to public benefits via prepaid debit cards. And banks are increasingly extracting hefty cuts of these funds through an assortment of small fees. U.S. Bank, JP Morgan Chase, Wells Fargo, Bank of America and other institutions hold contracts to distribute these benefits on prepaid debit cards.
When Bank of America announced plans to charge regular banking customers a $5 monthly fee to use their debit card created a wave of public criticism. But the lesser-known fees attached to prepaid debit cards are already extracting money from the most vulnerable Americans -- those unable to pay their bills and feed their families without public help -- in the midst of stubbornly high unemployment and soaring rates of poverty.
"The big banks have actually figured out a way to make unemployed workers a profit center, one that only grows as things get worse," said Angela Martin, executive director of Economic Fairness Oregon, a nonprofit advocacy group for low income and poor families.
A spokeswoman for U.S. Bancorp, the parent company of U.S. Bank, said unemployment recipients are clearly informed about the fees that pertain to their debit cards. She added that the cards provide a convenient and economical service, because they allow holders to use them to buy goods at stores and withdraw cash back without incurring a fee.
Prepaid debit cards often look a lot like the debit cards which many Americans are already familiar with. But the cards can carry a range of fees for basic banking activities such as visiting an ATM, making a purchase, checking one's balance or paying a bill online.
Six years ago, states distributed $55 billion in public benefits via prepaid debit cards, according to an estimate from Mercator Advisory Group, which monitors the consumer payment industry. By last year, that figure had ballooned to $133 billion. Mercator does not track how much of that money was handled by banks.
There are some hints of how much money is flowing from America's poorest families to banks. In 2008, California's welfare families paid $8 million in surcharges to access their cash welfare benefits, according to a Western Center on Law and Poverty analysis, which advocates for the poor. Surcharges paid by welfare recipients will exceed $16 million this year, the Center projects.
The revenue generated from providing access to public benefits on prepaid debit cards has become particularly important to banks this year, said Lauren Saunders, a managing attorney at the National Consumer Law Center in Washington, D.C. A 2010 federal law capped the swipe fees banks can collect from merchants when consumers use ordinary debit cards. But those caps do not apply to the prepaid debit cards used to withdraw unemployment benefits and other forms of cash assistance.
In several states, the public benefits debit card business involves a largely captive audience that must exert itself to find an alternative means of securing its money. A half dozen states force the unemployed to receive their benefits on prepaid debit cards, according to a May study released by the National Consumer Law Center.
In Oregon, jobless people who apply for unemployment benefits are automatically given their weekly benefits via a U.S. Bank ReliaCard unless they expressly opt out and furnish information about a personal bank account to establish a direct deposit.
Six Oregon residents interviewed by The Huffington Post said that when they applied for unemployment benefits online, the state's website did offer them the opportunity to set up a direct deposit instead of relying upon a prepaid debit card furnished by U.S. Bank. But the page on which they were offered the options did not clearly lay out the fees that can be incurred with the debit card option, they said. Another section of the Web site does list the fees, The Huffington Post found, but locating that information requires looking on a separate page.
Between July and September, U.S. Bancorp secured $357 million in revenue through the division that includes its prepaid cards, according to its most recent earnings statement. That was more than one-fourth of its total revenues. The bank refused to say how much of this revenue was comprised of fees from its handling of state unemployment benefits.
The fees are the sole source of revenue the bank derives by handling unemployment benefits and court-ordered child support payments in Oregon. The state does not pay the bank for issuing debit cards or administering the payments. Oregon's treasurer will begin negotiating a new contract in November. A request for proposals from other banks has not been issued.
For the state, the cards minimize the need to mail checks or manage transfers to myriad banks. Since 2007, Oregon has saved at least $11 million on printing, mailing and other costs associated with the unemployment program alone, said James Sinks, a spokesman for Oregon State Treasurer Tedd Wheeler's office. State staff estimate that over the course of the contracts, about 40 percent of people in both programs have used ReliaCards, Sinks said. The remainder receive funds via direct deposit.
Sinks described the notion that fees are unfair, abusive or out of touch with consumer spending habits as "specious" and "laughable." People can always obtain cash without paying fees by making a purchase at a store where customers can request cash back.
"The card was negotiated the way that it was to make people's money available to them at the lowest cost," said Sinks. "Are there fees, yes. But there are ways for people to access their money for free and there are robust ways to do that. I don't believe that most people are paying fees."
But several unemployment benefit recipients in Oregon said it was quite difficult to switch to direct deposit after they learned of the fees on their prepaid debit cards. Many recipients complain that their unemployment benefits are so limited that even an unwanted pack of gum purchased to access their benefits without fees amounts to a consequential expense.
A woman in the southern Oregon town of Grants Pass who enrolled in the state's unemployment program in 2007 said she did not receive a notice of fees until several months after she incurred some $220 in surcharges. A Portland man who enrolled in August and receives $507 in benefits each week said he cannot find a U.S. Bank ATM or retail store where he can remove more than $200 at a time, forcing him to pay fees to get all of his funds.
Linville, who lost his job as a data entry clerk in August, said he was not aware of the fees when he signed up for the U.S. Bank card on Oregon's unemployment web site but later received a schedule of fees in the mail. He has a bank account but thought the U.S.Bank card would give him a way to pay bills immediately when his unemployment benefits arrived. Often, Linville is so short on cash that he pulls money off the card to pay bills on the same day they are due, he said. If he can, he pays the bill with the debit card, a retail purchase that does not carry a fee. But, that is not always an option.
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