Firm That Held Foreclosure Costume Party Closing

foreclosure costume party firm closingBy Carolyn Thompson

BUFFALO, N.Y. (AP) -- A New York law firm that specializes in foreclosures and was criticized for a Halloween party that mocked the homeless will close, a spokesman said Monday.

Steven J. Baum P.C., one of the largest-volume mortgage foreclosure firms in New York, filed notice of mass layoffs with the state Department of Labor and local officials, indicating at least a third of its employees would lose their jobs. On Monday, spokesman Earl Wells III confirmed the law firm would close altogether.

While it had been on the radar of federal and state investigators for some time, the Baum firm became the target of widespread public ire last month after The New York Times published pictures from its 2010 Halloween party, which showed people dressed to look homeless and part of the office decorated to resemble a row of foreclosed homes.

One person had a sign around her neck that read: "3rd party squatter. I lost my home and I was never served," apparently mocking the explanation of some homeowners facing foreclosure proceedings. The Times said the pictures were provided by a former employee.

About three dozen protesters from the Occupy Buffalo movement against corporate greed picketed outside Baum's offices last week.

"Hey, hey. Ho, ho. Steven Baum has got to go," they chanted, demanding that state Attorney General Eric Schneiderman shut the firm down.

The company employs 67 full- and part-time employees in suburban Buffalo and 22 on Long Island. The closing may also affect hundreds of others employed at a document-processing firm that shares office space with Baum.

Last year, the Amherst firm handled nearly 40 percent of the 46,572 foreclosure actions brought in New York courts, the New York Law Journal reported in February.

"Disrupting the livelihoods of so many dedicated and hardworking people is extremely painful, but the loss of so much business left us no choice but to file these notices," a statement from owner Steven J. Baum said.

Wells said Baum would have no further comment.

The firm will fulfill outstanding work on behalf of its clients, Baum's statement said.

Baum's foreclosure practices have been under intense federal and state scrutiny in recent months, culminating in Fannie Mae joining Freddie Mac last week in barring the firm from receiving new referrals from the federally backed mortgage giants.

Amid an investigation by the U.S. attorney's office in Manhattan, Baum agreed last month to pay $2 million and change its practices after admitting to errors in legal filings that it blamed on the high volume of mortgage defaults and foreclosures it handles.

Schneiderman also is investigating the firm, a person familiar with the investigation has said, speaking on condition of anonymity because active investigations are not discussed publicly.

On Monday, Schneiderman's office issued a statement saying it would continue to go after improper practices.

"While we cannot comment on ongoing investigations, Attorney General Schneiderman will continue to bring accountability to the firms responsible for the mortgage crisis and put an end to the abusive foreclosure practices that have devastated families across the state," the statement said.

Baum's press release did not mention Pillar Processing LLC, which had been owned by Baum and affiliated with the firm until being spun off. The document processing business shares office space with Baum and depends on it for business.

The Buffalo News, citing an unidentified Pillar employee, said workers there had been notified of a shutdown by the end of February, affecting 600 workers. Pillar did not immediately respond to an Associated Press request for comment.

Baum, who initially denied to the Times that employees had mocked those who had lost their homes, has since apologized for the costumes, saying they were in poor taste. He also met with Dale Zuchlewski, executive director of the Homeless Alliance of Western New York, who had sent a letter demanding an apology and offering to educate employees on the plight of the homeless.

That didn't stop the ranking member of the House Committee on Oversight and Government Reform from issuing a request to Baum for records and documents relating to its foreclosure practices - and its Halloween party. In a Nov. 4 letter, Maryland Democratic Rep. Elijah Cummings said pictures from the party "demonstrate a culture of disdain for families suffering foreclosure and a disregard for the rule of law."

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