Steven J. Baum Pc, the largest foreclosure law firm in New York until it shut down last year, reached a $4-million settlement with the state over abuses in its legal work.

Part of the money to be paid by the firm, Pillar Processing Llc, Steven Baum himself and managing partner Brian Kumiega will be used to help homeowners facing foreclosure or victims of predatory lending, New York State Attorney General Eric Schneiderman said Thursday in a statement. Baum formed Pillar in 2007 to process foreclosure documents.

"The Baum firm cut corners in order to maximize the number of its foreclosure filings and its profits," Schneiderman said in the statement. Baum and Kumiega have also agreed not to represent lenders or servicers in new foreclosure cases for two years, Schneiderman said.

The firm said in a statement that it didn't admit wrongdoing as part of the settlement.

In October the firm, based in Amherst, just north of Buffalo, reached a $2-million agreement related to its foreclosure practices with Manhattan U.S. Attorney Preet Bharara. After that settlement was announced, Fannie Mae and Freddie Mac, the mortgage-finance companies under U.S. conservatorship, dropped Baum from their lists of law firms eligible to handle foreclosures. The firm then said it would close.

"After an exhaustive 10- month investigation, the attorney general's office did not identify a single instance where a foreclosure proceeding was brought by the Baum firm where the homeowner wasn't actually in default," Elkan Abramowitz, a lawyer for the settling parties, said in a phone interview.

The Baum firm handled more than 100,000 foreclosures from 2007 to 2010, according to Schneiderman.

The company drew public criticism over pictures from its 2010 Halloween party, published in The New York Times, showing part of the office decorated to resemble a row of foreclosed homes. Baum later apologized.

-- Combined wire services

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