Conflict Of Interest Problems Continue Dogging Notorious Buffalo-Area Foreclosure Mill In Homeowner's Upcoming NYC Bankruptcy Proceeding

In New York City, the New York Post reports:

• A Bronx homeowner is scheduled for a courtroom battle royale later this month -- facing off in Manhattan bankruptcy court against the largest foreclosure mill in the state to see if the firm's client, GMAC Mortgage, has the right to toss her from her Pelham Gardens home.

• Also at issue is whether the law firm, Steven J. Baum PC, may have a conflict of interest problem. The lawyer for the homeowner, David Shaev, claims in recently filed court papers that a Baum lawyer allegedly represented GMAC without disclosing she worked for Baum.(1) The thorny issue is of growing interest to New York judges -- who last year faced more than 50,350 foreclosure actions, according to RealtyTrac, many of which were brought by banks that have sold or securitized the loans. Such actions make proving which entity owns the loan difficult.

• That issue is key -- banks that can't prove they own a loan can't legally foreclose. At times, lenders and law firms have been chastised for taking short cuts to gloss over the ownership issue.

• Complicating matters is that most delinquent homeowners battle foreclosure actions without a lawyer and get steamrolled. But that may be changing. On June 3, Bankruptcy Judge Allan Gropper denied a bank's attempt to move against a homeowner because it couldn't prove it owned a mortgage. Five days later, Brooklyn state court Judge Wayne P. Saitta, citing a bank's "egregious" misrepresentation, awarded a homeowner $10,000 in sanctions when the bank tried to evict knowing it didn't own the mortgage.

• "The court can only speculate in how many other cases plaintiffs with no interest in mortgages wrongfully foreclose on them and collect proceeds to which they are not entitled," Saitta wrote in his order. "It is only because this was one of the rare foreclosure cases where the defendant was represented by counsel that the fact that the [bank] did not own the note came to light," Saitta continued.(2)

Source: GMAC faces New York foreclosure brawl.

(1) For earlier posts on problems facing the foreclosure mill firm Steven J. Baum P.C. see:

• Brooklyn Judge Journeys Through "The Twilight Zone" In Recent Ruling Slamming Standing Lacking Lender, Notorious Foreclosure Mill Law Firm,
• Brooklyn Judge Strikes Again; Dismisses Foreclosure With Prejudice Where Assignment Of Mortgage Fails To Transfer Title To Promissory Note,
• Brooklyn Judge Bags Foreclosure Mill Law Firm Representing Both 1st & 2nd Mortgage Holders In Legal Action In Violation Of Conflict Of Interest Rule?,
• Upstate NY Assembly Line F'closure Mill Law Firm Attracts Spotlight, Scorn From Various Quarters; Manufactured Mortgage Assignments Among Allegations.

(2) For another of Judge Saitta's recent rulings denying foreclosure, without prejudice, to a standing-lacking lender, see Bank of NY v Alderazi, 2010 NY Slip Op 20167 (NY Sup. Ct. Kings Cty. April 19, 2010).