Friday, July 23, 2010

Nassau County Court seeks to sanction Steven J. Baum, P.C. for irregularities in foreclosure eviction

 By Kate Cavallaro and Nicholas M. Moccia, Esq.

Petitioner Federal Home Loan Mortgage Corporation ("FHLMC") commenced a holder-over proceeding to evict Respondent Paul Raia from his home. The underlying eviction stems from the foreclosure brought by Well Fargo Home Mortgage, Inc. (“Wells Fargo”), resulting in the sale of the Paul Raia’s home (“Subject Premises”). At the sale, Petitioner Federal Home Loan purported to be the successful bidder and the rightful occupant of the Subject Premises. However, the court found that this was not in fact the case.

A later examination of the documents submitted in support of FHLMC’s petition indicated that Wells Fargo was the actual lender that had a security interest in the Subject Premises. Additionally, it was revealed that a number of the sworn allegations that were asserted in the petition were false. Specifically, the court took issue with certain representations made by the law office of Steven J. Baum, P.C. regarding FHLMC’s right to evict Paul Raia post-auction. The court held that it “will hold a hearing to determine what sanctions if any, that may be imposed upon Steven J. Baum, P.C. for the false representations made in the petition,” as counsel for FHLMC’s.

The court found that Wells Fargo—and not FHLMC—was the successful bidder at the foreclosure auction of the Subject Premises. However, FHLMC claims that Wells Fargo assigned its auction bid to FHLMC. Upon examination of “Assignment of Bid” document, the court noted that it contained the signature of an attorney from Steven J. Baum, P.C., although there was no indication on whose behalf the firm was signing. “Mr. Baum’s office claims to have the authority to execute the document for Wells Fargo but provides no evidence in support of that allegation.” Respondent asserts that the "Assignment of Bid" is invalid and ineffective because it is not executed by Wells Fargo, thus FHLMC never acquired title to the bid, the collateral, or the right to the possession of the cooperative apartment, and Petitioner lacks standing to institute this proceeding. The firm of Steven J. Baum, P.C. alleges to have the authority to assign the bid on behalf of Wells Fargo because the firm represented Wells Fargo in the cooperative foreclosure sale on January 5, 2010. However, neither a power of attorney to Steven J. Baum, P.C. nor a supporting affidavit from Wells Fargo was presented with the "Assignment of Bid." For this reason the Court found the assignment invalid.

This court granted Respondent Raia’s motion dismissing the holdover proceeding with prejudice due to the finding that FHLMC lacked a possessory interest in the subject premises. As noted earlier, the Court has also set a date for a hearing to determine what, if any, sanctions should be imposed against the law firm of Steven J. Baum, P.C., for the false statements made in the original petition. 

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