A homeowner defense association has accused New York's largest foreclosure law firm of inappropriate behavior and asked the state's top judge to stop any foreclosure cases the firm handles.
In a letter to Jonathan Lippman, the state's chief judge, the New York State Foreclosure Defense Bar wrote that the firm of Steven J. Baum P.C. in Buffalo, N.Y., "exceeded the boundaries of common decency when it celebrated and mocked the plight of homeowners facing foreclosure" at a 2010 Halloween office party.
Photographs from the event were published last week with an op-ed piece on the New York Times Web site.
The letter, which was dated Oct. 31 and released Thursday, noted that the party was held a few days after Lippman's Oct. 20, 2010 order that courts throughout the state hold plaintiffs' counsel responsible for accuracy of allegations in foreclosure proceedings.
The firm made "a mockery of the safeguards" that Lippman had put in place and possibly violated the state's Lawyer's Code of Professional Responsibility, the letter stated.
The photographs included employees dressed as squatters who had lost their houses through foreclosure and showed a corner of the office decorated to look like a row of foreclosed homes.
A spokesman for the Baum firm provided a prepared statement from the firm's owner, Steven J. Baum, about the Halloween party.
"I again want to sincerely apologize for the inappropriate costumes worn by some of our employees at our Halloween Party in 2010," Baum said in the written statement. "It was in extremely poor taste and I take full responsibility. I know these photos were extremely offensive and people have every right to be upset with me and my firm."
The organization asked that Lippman stay all residential foreclosures and evictions from plaintiffs represented by the Baum firm until an investigation could be conducted. The firm handles about 40% of foreclosure cases in New York, representing JPMorgan Chase & Co., Wells Fargo & Co. and other large banks.
The Foreclosure Defense Bar also said in the letter that the "apparent culture of cavalier ridicule" promoted a disregard for rules and agreements with regulators. The letter cited a $2 million settlement the firm reached with the federal government in October. Under that deal, the firm has to disclose foreclosures where employees signed mortgage assignments as corporate officers of Mortgage Electronic Registration Systems (MERS). The letter claimed that the firm has failed to comply and asked that cases be stayed or that the court review documents to ensure the proper party is seeking foreclosure.
Baum said in a written statement Friday that since the settlement was not scheduled to take effect until Nov. 6, his firm could not have failed to comply with it yet. He said that under the agreement, disclosure regarding the MERS assignments is not required until an application for a foreclosure judgment is filed in a case. He said that no disclosure is ever required in cases where judgment of foreclosure has already been filed and that it was incorrect to assert that his firm must make that disclosure immediately in all cases.
The Foreclosure Defense Bar is an association of private and public interest lawyers who represent homeowners in New York