In an abrupt turn of events, Steven J. Baum is shutting down his foreclosure law firm and laying off at least 90 full- and part-time employees in Amherst and Long Island just days after losing the bulk of his business when Fannie Mae and Freddie Mac stopped giving the firm new work.

The closing could also affect 600 employees at Amherst-based Pillar Processing, a neighboring firm that handles much of the paperwork from the Baum office.

Steven J. Baum PC said Monday it had filed a WARN notice with the state Labor Department and local authorities, notifying them of impending "mass layoffs which [are] occurring at the law firm." The firm said it notified its employees as well.

The notifications are required under the federal Worker Adjustment and Retraining Notification law. The law firm employs about 67 at its main office at 220 Northpointe Parkway and another 22 on Long Island at a secondary office.

"We will fulfill all of our obligations under WARN and during this process we will also fulfill our remaining work on behalf of our clients," Baum said. "Disrupting the livelihoods of so many dedicated and hardworking people is extremely painful, but the loss of so much business left us no choice but to file these notices."

Baum spokesman Earl Wells confirmed that the firm would be closing, but said the firm would finish work that it has already begun on cases it has already been handling, although it won't be taking on new work. The firm said Baum would not comment further.

The press release did not say anything about Pillar Processing LLC, a document processing firm that had been owned by Baum until it was spun off to private-equity firms. It still shares office space and resources with Baum, and is dependent on Baum's work.

A Pillar employee indicated to The Buffalo News that workers there, too, had been notified of a shutdown by the end of February, affecting 600 workers. Baum and Pillar did not respond to a request for information about Pillar's future.

The impact of the closing on attorneys, borrowers and others is likely to be significant, said Rebecca Case Grammatico, an attorney at the Empire Justice Center, a nonprofit consumer legal and advocacy group in Rochester.

"It's going to dramatically change the landscape of foreclosure work," she said. "I hope it sends a message to attorneys that are not diligent in all aspects of their representation of lenders."

The closure comes just days after both Fannie Mae and Freddie Mac banned the law firm from receiving any new work from lenders and servicers working on behalf of the mortgage giants.

Fannie and Freddie together own or guarantee about $5 trillion of the nation's mortgages and dominate the industry, so other major lenders and servicers tend to follow their lead. Already, at least a couple of companies have also dropped Baum for all their work.

The announcement caps a remarkable fall for the state's dominant foreclosure law firm, which until recently handled 40 percent of all foreclosures statewide. That's also made it a lightning rod for criticism and anger during the mortgage crisis, particularly downstate in New York City and Long Island.

The firm had been denounced by consumers and consumer advocates for its work on behalf of lenders even before the "robo-signing" controversy thrust it into the middle of a nationwide crisis over the legitimacy of many foreclosures.

Since then, the firm has been accused of "robo-signing" -- indiscriminately signing documents, often by people posing as others, and of other improper methods.

The firm last month agreed to pay a $2 million fine and change its practices to settle a federal investigation by the U.S. Justice Department, and is also under investigation by New York Attorney General Eric Schneiderman. Most recently, Rep. Elijah Cummings, D-Md., and ranking member of the House Oversight and Government Reform Committee, launched an investigation into the Baum firm, and wrote to the firm to request documents.

But what may have hastened the firm's demise were photos that recently emerged into the national spotlight from the firm's Halloween party last year, at which Baum employees dressed up as foreclosure victims and attorneys, mocking and ridiculing them.

Baum says he has apologized, but the damage was done. In the wake of those photos and national stories, politicians, consumer advocates, and even other attorneys denounced him for a lack of sensitivity, and the mortgage industry quickly began to distance itself.

For consumers, the closing of such a large firm will cause confusion, Grammatico said. As much as Baum's firm was disliked, it was organized and "there were some things you could count on," she said. Other firms are not as coordinated, so "the confusion that borrowers are going to feel is going to be substantial."

The closure of the firm ends a law firm that was started decades ago by Marvin Baum, a respected real estate attorney, who was an active author and speaker on real estate law and foreclosures, and was a past chairman of the Real Property Law Section of the state Bar Association. Steven Baum joined the firm in 1986. His father died in 1999, and the firm changed its name shortly afterwards. Baum created Pillar Processing later.

jepstein@buffnews.comnull