October 31, 2011

Honorable Jonathan Lippman Chief Judge of the State of New York Chief Judge of the New York Court of Appeals 230 Park Avenue, Suite 826 New York, New York 10169 Dear Chief Judge Lippman: We hope this letter finds you well. The undersigned are writing on behalf of the founding members of the New York State Foreclosure Defense Bar (recently incorporated as a New York State not-for-profit organization). The New York State Foreclosure Defense Bar (“NYSFDB”) is an association of New York attorneys who are committed to protecting the legal rights of foreclosure defendants, and to ensuring that they are afforded the due process rights and protections afforded by the U.S. and New York State Constitution. Our guiding tenet is that the dignity of those who are facing foreclosure must be preserved. While our organization was created primarily to address the dire need for foreclosure defense and the development of jurisprudence, we found it imperative to bring to Your Honor’s attention the shocking New York Times column regarding the 2010 Halloween Party at the Law Offices of Steven J. Baum P.C. in Buffalo, New York (the “Baum Law Firm”). The Baum Law Firm, which files and/or litigates approximately 40% of New York foreclosures, exceeded the boundaries of common decency when it celebrated and mocked the plight of homeowners facing foreclosure, and ridiculed those who exercise their constitutionally protected rights to interpose defenses to save their homes (the “Baum Halloween Party”). We have attached a copy of Mr.

26 Court Street, Suite 603, Brooklyn, New York 11242 347.705.0569 (Telephone)

Honorable Justice Jonathan Lippman October 31, 2011 - Page 2 Joe Nocera’s October 29, 2011 New York Times column and related pictures for your ease of reference. Ironically, the Baum Halloween Party was held a few days after Your Honor’s October 20, 2010 special order that the Courts will hold plaintiffs’ counsel responsible for the accuracy of allegations in foreclosure pleadings. Apparently, the Baum Law Firm thought it more timely to focus on using information gathered in homeowners’ litigation files and court filings to set the stage and theme for their annual Halloween Party, rather than comply with Your Honor’s October 2010 Administrative Order.1 As the New York Times column reflects, the Baum Law Firm made a mockery of the safeguards that Your Honor put in place by encouraging its staff to celebrate Halloween with caricatures, costumery and a carnivalé designed from homeowners’ personal information, financial records, and litigation responses and defenses.2 With this correspondence, NYSFDB takes the position that this was a vile and cruel degradation of the plight of thousands of New York homeowners facing foreclosure, under the guise of Halloween humor, and of the workout options and foreclosure defenses afforded to them under the laws of New York State. NYSFDB is writing to Your Honor to respectfully request the following: I. A stay, by Administrative Order, of all residential foreclosure actions and related evictions where the plaintiff is currently or has ever been represented by the Baum Law Firm, until an investigation is conducted by the appropriate authorities to determine whether foreclosure defendants’ personal and/or financial information was disseminated cavalierly throughout the Baum Law Firm for any improper purpose, in violation of federal and state laws.

The New York Times report also raises the questions which include (a) whether the Baum Law Firm is guilty of violating the letter or spirit of the New York Lawyer’s Code of Professional Responsibility by compromising the trust that the public, and in particular, homeowners facing foreclosure, can have in the legal profession; and (b) whether the inappropriate and questionable misconduct violated the New York Lawyers’ Code of Professional Responsibility, requiring disciplinary action.


To date, members of the NYSFDB have seen very few, if any, submissions of the affirmation required by Your Honor’s October 2010 Order.

The attorneys and legal assistants at the Baum Halloween Party are the same Baum employees who process thousands of hardship affidavits and loan modification applications containing personal pleas and confidential personal and financial information that homeowners provide as part of the workout and settlement process. Further, the flaunting of a row of foreclosed homes under the banner “Baum Estates” raises the question whether the Baum Law Firm or any of its members or employees has a vested interest in the properties that are the subject of foreclosure actions commenced by his firm.

Honorable Justice Jonathan Lippman October 31, 2011 - Page 3 A copy of this letter is simultaneously being sent to New York State Attorney General Eric Schneiderman, requesting an investigation into the question specified in endnote 1 hereto.i * * *

Unfortunately, the insensitive attitude towards the plight of homeowners and the use of that information to create humorous costumery is consistent with the blatant lack of respect, grand standing, ridicule, sarcasm and unprofessionalism that is exhibited by the Baum Law Firm and other “foreclosure mills” on a daily basis in the Foreclosure Conference Parts established pursuant to CPLR 3408 and before the IAS Courts. The common experience of homeowners and NYSFDB members is that plaintiffs’ counsel behave as though foreclosure defendants are unworthy of due process and the additional legal protections and safeguards against illegal or unnecessary auctions of their homes. In short, there is a systematic flouting of the rules promulgated by Your Honor, the New York State Legislature, and Chief Administrative Judges across this state. This flouting of the rules emanates from what is an apparent culture of cavalier ridicule, derision and disregard for the law and the plight of homeowners facing foreclosure. There is wanton and constant disregard for the fact that defendants are in foreclosure due to unforeseen hardships, such as unemployment, sickness, adjustment of monthly mortgage payments, loss of business revenue, and other misfortune as a result of the ongoing recession and/ excessive subprime and predatory lending – circumstances that New York State’s Governors, Legislature and Your Honor have recognized must be taken into account in the midst of foreclosure proceedings. This culture promotes a routine disregard for court rules, administrative directives, and agreements with regulators to achieve a fair and balanced resolution of the high volume of foreclosures in New York State. A primary example is the following: On October 6, 2011, the federal government reached a settlement agreement regarding the questionable foreclosure practices of the Baum Law Firm, after the conclusion of a federal investigation conducted by the Civil Frauds Unit of the United States Attorney’s Office for the Southern District of New York, under the Financial Institutions Reform, Recovery and Enforcement Act of 1989. Under the settlement, the Baum Law Firm is required to pay $2 million and significantly reform its foreclosure practices. With respect to pending residential foreclosure actions, Paragraph 15(a) of the settlement agreement requires the Baum Law Firm to identify and disclose to the Court all foreclosure actions in which Baum employees signed mortgage assignments as corporate officers of Mortgage Electronic Registration Systems, Inc. (“MERS”). Because the Baum Law Firm has not complied with its disclosure obligations under terms of the federal settlement agreement, we further respectfully request the following:

Honorable Justice Jonathan Lippman October 31, 2011 - Page 4 II. That all New York residential foreclosure actions commenced and/or prosecuted by the Baum Law Firm should be stayed by Administrative Order until the Baum Law Firm identifies those foreclosure actions in which its employees executed mortgage assignments as officers of MERS. The Baum Law Firm represents plaintiffs in 40% of all foreclosure actions in New York State. Alternatively, given the large percentage of residential foreclosure cases commenced and prosecuted (previously or currently) by the Baum Law Firm, CPLR 3408(e) empowers the Court to review UCC negotiated notes and related mortgage title documents to ensure that the proper party is seeking foreclosure. We thus respectfully request a uniform administrative process by which tainted foreclosure actions can be distinguished from meritorious foreclosure actions. * * *


What the Baum Law Firm has done with its Halloween costumes and signs is to borrow the themes and spirit of Halloween for cynical and insidious acts. With that, the firm’s attorney have soured the spirit of the celebration for members of the NYSFDB, their clients, and the thousands of homeowners across the state who are unrepresented by counsel in foreclosure actions or who may already have being evicted from their homes following actions commenced by the Baum Law Firm. We respectfully request Your Honor’s attention to the above requests numbered I, II and III, and greatly appreciate your time. We look forward to your response. Respectfully, /S/ Founding Board of Directors New York State Foreclosure Defense Bar Yolande I. Nicholson, Esq., President Serge Petroff, Esq., Vice President Catherine Isobe, Esq., Corporate Secretary Enclosure cc: Mr. Eric Schneiderman, Attorney General, New York State Chief Administrative Judges of the Supreme Courts of the State of New York Senate Judiciary Committee, New York State Senate Members of the New York State Foreclosure Defense Bar

Whether state and federal laws that govern client confidentiality, and confidentiality and integrity of homeowners’ financial information, were violated by the Baum Law Firm.

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