Bank of America, Wells Fargo Foreclosure Firm Closes Doors After Media Reveals Homeless-Themed Halloween Bash
New York-based foreclosure firm Steven J. Baum will close its doors for good on the heels of a high profile scandal, resulting in the loss of partnerships with Freddie Mac and Fannie Mae.
In late October, the New York Times ran photographs – submitted by a former employee -- which depict the company’s annual Halloween party.
In the pictures, employees openly mocked the homeless victims of foreclosure, even boasting signs that read: “3rd party squatter. I lost my home and I was never served.” According to the unnamed source, the sign is meant to reflect “the typical excuse” of homeowners attempting to avoid a foreclosure proceeding.
The firm had faced its share of troubles even before the pictures went public. According to the Times, Baum and his colleagues had previously faced scrutiny regarding their foreclosure-related legal work. One tactic dubbed “robo-signing” was among the most criticized, while the firm’s other practices were called “incredible, outrageous, ludicrous and disingenuous” by a state court judge in Brooklyn last year.
The firm was accused of filing misleading legal papers in order to expedite foreclosures, and reached a settlement last month with the United States attorney’s office in Manhattan. Baum agreed to pay a $2 million penalty and promised to change its practices.
The final nail in the coffin came after losing mortgage giants Freddie Mac and Fannie Mae, who cut ties with the firm in the wake of the Halloween scandal. In a follow-up article, NYT writer Joe Nocera published a letter he had received from Mr. Baum himself: “Mr. Noceroa – You have destroyed everything and everyone related to Steven J. Baum PC,” said the letter. “It took 40 years to build this firm and three weeks to tear down.”
“I think that’s what they call shooting the messenger,” Nocera quipped.
The firm filed paperwork with government agencies notifying them of its plans to close. The filings came under federal law, which requires employers to provide notice before mass layoffs.
They may not be homeless, but 89 employees are now jobless as a result of the closing.