Pillar Processing, a back-office and document-processing firm with close ties to the Steven J. Baum PC foreclosure law firm, will lay off 590 full- and part-time employees at its offices in Amherst.

The company told state and local officials that the layoffs are expected to take effect Feb. 27. Pillar is also laying off about 20 employees in Westbury, on Long Island.

"This is extremely difficult news because it impacts so many people, especially in Western New York," Michael Hubsch, Pillar's director of human resources, said in a statement. "These are hard-working, dedicated people as well as loyal employees, and they performed their work with great integrity." Hubsch could not be reached to comment further.

The majority of the layoffs -- 435 -- involve processors. A total of 117 paralegals, team leaders, supervisors and legal secretaries will also be affected, according to a document filed along with a notice of the layoffs.

"It is not anticipated the entire offices will be closed, and it is likely that certain employees will be retained for an indefinite period following [Feb. 27]," said a letter submitted by Hubsch to state and local officials.

A letter sent to employees referred to Pillar's plan to "permanently close that part of its New York operations which serviced a New York law firm."

Questions about the fate of jobs at Pillar arose after Steven J. Baum PC gave notice last week that it would lay off 90 employees, including 67 in Amherst, effective Feb. 20.

Baum founded Pillar several years ago to handle the law firm's work. Pillar was sold to private-equity firms, but it still shares resources and space with Baum at 220 Northpointe Parkway in Amherst.

Steven J. Baum PC announced its 90 layoffs after Fannie Mae, Freddie Mac and major lenders pulled their business from the firm in the wake of photos that emerged from a Halloween party last year in which debtors were mocked as homeless.

In April, State Attorney General Eric T. Schneiderman issued subpoenas to Steven J. Baum PC and Pillar Processing as part of an investigation into Baum's foreclosure practices.

And in October, Steven J. Baum PC agreed to pay a $2 million fine and "extensively" overhaul its practices in a settlement with the U.S. Attorney's Office in Manhattan. The settlement also covered Pillar; Baum was directed to instruct Pillar employees to adhere to policies and procedures laid out in the agreement.

Serge Petroff, executive vice president of the New York State Foreclosure Defense Bar, said the layoffs at Pillar were not unexpected in light of the developments at the Baum firm. But Petroff said Pillar's plans make him wonder whether Pillar will abide by the terms of the federal settlement.

Petroff said he also does not want to see homeowners already in the foreclosure process end up incurring greater expenses because of the layoff plans announced by Baum and Pillar. Their expenses could rise if the process is delayed, he said.

Attorney Jeffrey M. Freedman said the layoffs at the two companies will be a blow to the local economy.

"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 in a statement. "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."

mglynn@buffnews.comnull