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Loss of Baum Law Firm and Pillar Processing is a blow to WNY economy

Posted: November 30, 2011

Buffalo, NY -- The closing of Pillar Processing in the wake of the closure of the Steven J. Baum PC foreclosure law firm, will add another 435 people to the unemployment lines in Western New York. The Baum firm, which announced it was closing and laying off 89 people last week, was using the services of Pillar Processing to handle the documentation for its foreclosure proceedings. The operations of both organizations came under the scrutiny of the U.S. Attorney and the New York State Attorney General’s office.

In 2007 Steven J. Baum sold all or a part of his stake in Pillar to Tailwind Capital. Tailwind is a hedge fund that buys companies that are valued between $25- and $100-million. Sometime later, Ares Capital Corporation, a publicly traded company invested over $30 million in Pillar.

On October 6, 2011, Steven J. Baum and Pillar Processing reached a settlement agreement with the U.S. Attorney’s Office in the Southern District of New York. The settlement included payment of $2 million and the promise to make reforms in their processing procedures.

“Baum and Pillar are not the only foreclosure organizations in the country that have been investigated by regulatory authorities for their practices,” Freedman said.

“Sloppy foreclosure work became common among some processors when the rate of homeowners defaulting on mortgages shot up and there was pressure from the banking industry to speed up the handling of foreclosure procedures. Some firms will pay fines, make changes, and continue to function. However, when Freddie Mac and Fannie Mae removed their business from Baum and Pillar, I believe it became impossible for them to stay viable.”

The situation is unfortunate for the slowly recovering Western New York economy, which experienced a 0.5 percent increase in new jobs over the 12 months ending October 31, 2011, according to the New York State Department of Labor.

“I’m not saying Baum and Pillar were not in the wrong, but according to my sources, many other firms in New York were doing the same things as Baum and Pillar,” Freedman said. “However, Baum and Pillar were the only upstate companies handling a large volume of foreclosure business, and now the work is most likely going to move to downstate firms that are still in business.”

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