Foreclosure Fraud 2011 NY Times

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Judge Arthur Schack, left, of New

York State Supreme Court, called one

filing outrageous. Jonathan Lippman,

the states chief judge, says law yers

must ask clients if their paperw ork is

sound.

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Judges Berate Bank Lawyers in ForeclosuresBy JOHN SCHWARTZ

Publi shed: January 10, 2011

With judges looking ever more critically at hom e foreclosures, they

are reaching beyond the bankers to heap some of their most

scorching criticism on the law yers.

In numerous opinions, judges have

accused lawyers of processing shoddyor even fabricated paperwork in

foreclosure actions when representing

the banks.

Judge Arthur M. Schack of New York

State Supreme Court in Brooklyn has

taken aim at an upstate lawyer, Steven

J. Baum, referring to one filing as incredible, outrageous,

ludicrous and disingenuous.

But New Y ork judges are also trying to take the lead in

fixing the mortgage mess by leaning on the lawyers. In

November, a judge ordered Mr. Baums firm to pay nearly$20,000 in fines and costs related to papers that he said

contained numerous falsities. The judge, Scott Fairgrieve

of Nassau County District Court, wrote that swearing to

false statements reflects poorly on the profession as a

whole.

More broadly, the courts in New York State, along with

Florida, have begun requiring that law yers in foreclosure

cases vouch for the accuracy of the documents they

present, which prompted a protest from the New York bar.

The requirement, which is being considered by courts in

other states, could open lawyers to disciplinary actions that could harm or even end

careers.

Stephen Gillers, an expert in legal ethics at New York University, agreed with Judge

Fairgrieve that the involvement of lawyers in questionable transactions could damage the

overall reputation of the legal profession, which does not fare well in public opinion

throughout history.

When the consequence of a lawyer plying his trade is the loss of someones home, and it

turns out there are documents being given to the courts that have no basis in reality, the

profession gets a very big black eye, Professor Gillers said.

The issue of vouching for documents will undoubtedly meet resistance by lawyers

elsewhere as it has in New York.

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A version of this article appeared in print on January 11, 2011, on page

A1 of the New York edition.

Anne Reynolds Copps, the chairwoman of the real property law section of the New York

State bar, said, We had a lot of concerns, because it seemed to paint attorneys as being

the problem. Lawyers feared they would be responsible for a banks mistakes. They are

relying on a client, or the clients employees, to provide the information on which they are

basing the documents, she said.

The role of lawyers is under scrutiny in the 23 states where foreclosures must be reviewed

by a court. The situation has become especially heated for high-volume firms whose

practices mirror the so-called robo-signing of some financial institutions; in these cases,

documents were signed without sufficient examination or proper notarization.

In the most publicized example, David J. Stern, a lawyer whose Florida firm has been part

of an estimated 20 percent of the foreclosure actions in the state, has been accused of filing

sloppy and even fraudulent mortgage paperwork. Major institutions have dropped the

firm, which has been the subject of several lawsuits, and 1,200 of the 1,400 people once at

the firm are out of work.

The Florida attorney generals office is conducting a civil investigation of Mr. Sterns firm

and two others.

Theres been no determination in a court that Mr. Stern or his employees did wrong

things, said Jeffrey Tew, Mr. Sterns lawyer, adding that the impact was nevertheless

devastating.

There are groups in society that everybody likes to hate, Mr. Tew added. Now

foreclosure lawyers are on the list.

Such concerns have, in recent months, brought a sharp focus on activities in New York

State, and in particular on the practice of Mr. Baum, a lawyer in Amherst, outside Buffalo.

Judges have cited his firm for what they call slipshod work that, in some cases, was

followed by the dismissal of foreclosure actions.

One case involved Sunny D. Eng, a former manager of computer systems on Wall Street.

He and his wife, who has cancer, stopped paying the mortgage on their Holtsville, N.Y.,

home after Mr. Engs I nternet services business foundered. The mortgage w as originally

held by the HTFC Corporation, but the foreclosure notice came fromWells Fargo, a bankthat the Engs had no relationship with. They hired an experienced foreclosure defense

lawyer on Long Island, Craig Robins. The court ultimately ruled in favor of Mr. Eng.

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Judges Berate Bank Lawyers in ForeclosuresPubli shed: January 10, 2011

(Page 2 of 2)

You want to call it God, you can call it God, Mr. Eng said. You

want to call it luck, you can call it luck. We just followed the system,

and thank God the system worked.

Through a spokesman, Mr. Baumsaid, The foreclosure process in New

York State is extremely complex and

subject to extensive judicial review. We

believe this review respects the due

process of anyone who challenges a

foreclosure. Consumer activists and

attorneys representing homeowners have their own agenda

in this process, including degrading the legal work we

conduct on behalf of our clients by using terms like

foreclosure mill, which I find personally and professionally insulting.

He added, What is important now is that all parties attempt to work together to resolve

issues amicably. The barrage of accusations and litigation does little to help the underlying

problems.

Cases across the nation like Mr. Engs have led New Yorks judicial system to take a hard

look at the 80,000 pending foreclosures in the state and demand that the paperwork be

sound, said the states chief judge, Jonathan Lippman. Knowing what we know, our only

option at least from my perspective is to turn to the lawyers who are officers of the

court and say, Youd better go to your clients and find out if these cases are real, he said.

The court devised a two-page affirmation to be signed by lawyers in foreclosure actions

saying they had reviewed the documents and had confirmed the factual accuracy of any

allegations with the clients.

Ann Pfau, deputy chief administrative judge for New York State, who has worked directly

with the state bar to carry out the plan, said, We need to know that this is a court process

that has some integrity.

Judge Pfau said, If you cant get good information, you shouldnt be filing the cases in the

first place.

To address some lawyer concerns, the judiciary issued a modified version of the

affirmation in November but said that the alterations were minor. In the end, the lawyers

are vouching for their filing, Judge Pfau said. They are absolutely still on the hook.

While lawyers are being implicated as part of the problem, they should also be part of the

solution, said Stephen P. Younger, the president of the New Y ork State Bar Association,

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A version of this article appeared in print on January 11, 2011, on page

A1 of the New York edition.

which has not taken an overall position on the foreclosure matter. Foreclosure defense

lawyers, he noted, have led court proceedings to throw out flawed cases.

The real problem is that there are thousands and thousands of people who are

unrepresented by lawyers, Mr. Y ounger said.

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