Amid revelations that foreclosures around the country have been improperly processed, State Attorney General Eric Schneiderman is stepping up an investigation of the cottage industry that foreclosures have become in New York. Mr. Schneiderman’s office recently issued subpoenas to a law firm that has handled about 40 percent of all foreclosures in the state. The firm, Steven J. Baum, has represented large lending institutions, including JPMorgan Chase, seeking to foreclose on delinquent property owners. It has pledged its cooperation and insisted that the attorney general will uncover no wrongdoing.
The company might well have followed all proper procedures. But the extent of the company’s involvement in the foreclosure business should raise concerns, especially in light of investigations that have uncovered unethical and illegal practices elsewhere. The firm has failed to provide proper paperwork in a number of cases, leading to criticism and, in one case, the imposition of sanctions from a judge. One lawyer said that the Baum firm’s paperwork was riddled with irrelevant and poorly researched information.
The Baum firm has filed more than 50,000 foreclosure cases over the past three years, a figure that rightfully set off alarm bells in Mr. Schneiderman’s office. It is worth noting, too, that federal prosecutors also are looking into the firm’s dealings.
No property owner is entitled to hold on to a home or a building that he or she cannot afford. As sad experience has taught us, over the past 10 or 20 years, many people bought property they simply couldn’t afford. Lenders have a right to seek legal remedies when property owners fail to make their payments.
That said, foreclosure is a drastic, and even tragic, measure. Lenders and the law firms they employ should be above board, their proceedings transparent and their paperwork beyond reproach.
The foreclosure business has taken on the look and feel of a white-collar assembly line. Mr. Schneiderman has every right to make sure that law firms and lenders are following proper procedures before taking such serious actions.