By MATT CHANDLER
mchandler@bizjournals.com | 716-541-1654

The Steven J. Baum firm may be removed from the foreclosure equation, but that doesn't mean things are smooth sailing for Western New Yorkers struggling to make payments.

In fact, there may be a bit of false hope among those who have fallen behind on mortgage payments. Foreclosure remains a very grim reality for thousands of families.

Vera Cedano is a staff attorney at the Western New York Law Center who specializes in foreclosures.

"Based on the fact that the Baum firm is going down and the fact that foreclosures have been on the low, there is a misconception that things are getting better," she said. "They are not."

She attributed lower numbers to the fact that banks are struggling to catch up with new regulations that require them to affirm the history of a loan by actually speaking to the lender and verifying the accuracy of documents before they begin a foreclose. While that may buy people some time, it won't stave off the inevitable.

"A lot of banks, when the new rules came out, put a lot of files on hold. That's why the numbers (of foreclosures) dropped," she said. "It wasn't that things were better; it was that the banks weren't proceeding on the foreclosure actions.

Paul Curtin is staff attorney at the Legal Aid Bureau of Buffalo. He had a good working relationship with the Baum firm but said its downfall is sure to create problems for some of his clients.

"A lot of our clients are sort of on the edge to begin with," he said. "Now their cases get extended because the Baum firm is transferring files and shifting cases to new firms. The process might end up hurting the clients."

He sees two things happening: Client who already are unable to keep up will be hit with accruing interest on the loan; and, unable to see the light at the end of the tunnel, some may just give up and walk away from their homes.

"I would hate to see foreclosures taking place just because homeowners couldn't bear to submit another packet of paperwork," he said.

Like Cedano, Curtin sees an inevitable influx of foreclosures coming in the next year.

"There are really two outcomes," he said: Either the cumbersome affirmation process will be struck down or it will be streamlined. In both scenarios, Curtin said there are "a ton" of foreclosures waiting in the wings.

"Eventually, either way, these cases are going to be filed," he said.

Predicting when is tricky, according to Curtin.

"It (the loan affirmation requirement) hasn't really been challenged in a serious, principled way in any of the higher courts," he said. "For all we know, something could come down the pike and bump it out on one decision. There could be a court decision coming out of the 4th Department on a Friday and, come Monday, things could look very different. So we are working to keep our clients prepared."

Sarah Galvan is a staff attorney with Legal Services for the Elderly, Disabled or Disadvantaged of WNY. She said another issue complicating the process is this: There is ongoing litigation involving the foreclosure crisis, including a class-action lawsuit involving the Baum firm.

That muddies the waters even more for those on the brink of foreclosure, she said.

"You have people who may have already been served with a summons and complaint and they are stuck in this limbo period," she said. "They are not getting a settlement conference, the bank isn't working with them outside of the settlement conference, and they are stuck while the fees continue to grow, compounding their problem."

Galvan said she has clients who were served more than a year ago and are still waiting to see where their case will go.

Asked when she sees the deadlock ending and clients getting answers to their foreclosure situations, she said it's anyone's guess.

"There have been some estimates that some of the banks have done a self-imposed moratorium on foreclosures through the end of the year," she said. "So it is possible that at the beginning of next year, we could start seeing a pickup."

Added Curtin: "We just keep working with our clients, getting them to file their paperwork and telling them to be ready because eventually, things will move forward."