ABQ real estate sector grappling with ransomware fallout
The cyberattack that plagued Bernalillo County has introduced new challenges for the local real estate community, but industry officials say it could turn into a real mess if the situation isn’t resolved quickly.
The Jan. 5 ransomware attack forced the Metropolitan Detention Center into lockdown, prompted county officials to shut down some buildings, and halted some services.
It also crippled the Clerk’s Office, which is entirely dependent on the network for its filing and recording system, and prevented the Treasurer’s Office from fully updating tax payment information.
“We all ride the same horse in Bernalillo County,” Clerk Linda Stover said. “Until that horse goes, we’re all sort of at the hitching post.”
The county has yet to provide an estimate of when it expects its systems to be fully operational again.
Stover said she hoped it wouldn’t take much longer.
“People get nervous, and I don’t blame them,” she said. “We too are anxious. »
Which recordings and functions are restricted? : Stover’s office typically files between 600 and 800 documents a day, she said. This includes real estate contracts, transfers of ownership, mortgages, liens, marriage certificates, powers of attorney and trust deeds.
Some features are available in other jurisdictions – engaged couples seeking a marriage license, for example, can obtain it from clerks in other counties. But paperwork for real estate transactions must be filed in the county where the property is located, and Bernalillo County currently has no way to register it.
“We are web-based; (without county computer systems) we have no way of tracking anything; we have no way to assign numbers,” Stover said.
His team of about 40 people is in many ways biding his time right now, Stover said, doing things like cleaning the office. She said people bombarded her office with questions about the situation but remained polite and understanding.
People looking for certain details on the county’s website may also run into dead ends.
Click on a link to search property tax records and a notice appears saying “Bernalillo County is continuing its assessment of suspected ransomware discovered on Bernalillo County systems. The county took the affected systems offline and severed network connections. We are sorry for the inconvenience.”
The normal 10-year property tax statement is not currently available on the site. Treasurer Nancy Bearce said there are ways to check if an owner is up to date, though they’re still imperfect.
Are people buying and selling homes affected? : For people in the process of buying or selling a home in Bernalillo County, the impact of the attack will likely depend on how far along the process is.
Jack Thompson, president and CEO of Albuquerque-based high-volume mortgage lender Legacy Mortgage, said Wednesday that home sales are continuing — for now, and with some caveats.
Thompson said he doesn’t expect buyers and sellers heading to the closing table in the next two to three weeks to be too affected. The title search for these transactions is likely well advanced, giving lenders and title companies the information they need on matters such as whether any back taxes are due. This allows these buyers and sellers to complete home sales with the understanding that the sale will be registered in the county once it is open again. Thompson said those buyers and sellers are being asked to sign additional documents to indicate they have been notified of the delay in final registration.
Are commercial real estate transactions affected? : It is unclear to what extent business transactions could be affected by the attack. Michelle Coons, New Mexico regional president for WaFd Bank, said Wednesday that WaFd Bank is weighing its options after receiving legal advice not to shut down major commercial projects in Bernalillo County until sales can be completed. recorded again.
Coons said there could be as many as 20 such projects in the pipeline right now in Bernalillo County.
“It’s a complex issue, and I think everyone is trying to figure out how to deal with it,” she said. “…I’ve been in banking for 38 years, and I can’t remember (a situation like) this.”
A local real estate attorney said the disruptions in the county were costing some of his clients money.
“If you have a loan on a property and you have to wait two weeks to close, you accrue an additional two weeks of interest on that loan,” said Debbie Ramirez of law firm Rodey. “On a commercial property, that’s a lot of interest.”
What about sales that should close a little further? : The longer the county’s systems are down, the worse the problem could get.
Thompson said that since the attack, title companies have not had access to research titles on upcoming new offerings. If that search can’t be done within two to three weeks, “it poses a substantial threat” to buyers and sellers when the meeting closes. delays because lenders will not have good access to up-to-date tax information.
Coons agreed that the timing would be crucial and said she would start worrying in about 30 days if the systems weren’t working.
“I think it’s just going to keep unraveling,” she said.
Coons said she also heard from her staff that the attack was affecting ratings.
“We are seeing an extreme backlog in appraisals because appraisers need to access Bernalillo County property records…which is delaying transactions,” Coons said.
Thompson said he hadn’t heard that complaint from his staff about the attack, but said appraisals generally take much longer than in previous years because the residential real estate market is tight. very busy.
Can transactions be protected? : Bridget Gilbert, a real estate agent at ERA Sellers & Buyers Real Estate, said she also sees title companies providing insurance so titles are covered between closing and the time the sale is recorded.
“I think everyone got along very well on this,” said Gilbert, who also serves as the 2022 board chair for the Greater Albuquerque Association of Realtors. “…The title companies are providing spread insurance that will allow us to move forward and complete and fund the deal.”
However, Coons, New Mexico regional president for WaFd Bank, said the bank’s outside counsel advised her that gap insurance was not permitted in New Mexico. She also said she’s heard of at least one major securities firm that isn’t closing deals at the moment. Calls to several title companies doing business in Bernalillo County were not returned.
“Title companies will say ‘yes, we will provide insurance’ but they are also asking the parties to sign this indemnification agreement saying that we understand there is a delay in registration and that we agree to cover any losses incurred by the title company as a result of this delay,” Ramirez said.
Does the attack affect people trying to refinance? : This may be the case, again due to the need for lenders to access up-to-date property tax information. The county continued to collect property taxes, and the deadline for first-half payments for most homeowners was Jan. 10. Bearce County Treasurer said she is showing title and mortgage companies how to use the county’s website to see if certain properties are up to date. -Dated; however, the information currently available does not include those who have made recent payments by check or money order. Those payments are still in a safe deposit box as the county tests new systems to process them.
“We have little bits (of information); unfortunately, that’s how it works” right now, Bearce said.
Thompson said Legacy Mortgage collects six months of taxes instead of the usual two when refinancing. When the system is back up and running, people who overpaid will be reimbursed, he said.
What about home insurance? : It is unclear whether a delay in registering property sales will impact coverage. Thompson of Legacy Mortgage said Wednesday he was unable to get a clear answer on the matter.
WaFd Bank’s Coons said she recommends consumers and financial institutions check property insurance policies carefully to ensure newly purchased goods are covered in case they are damaged before the sale is officially announced. registered with the county.
Can the county temporarily switch to pen-and-paper methods? : Stover said his office can’t do its job without computer systems because so much is connected.
“We can’t attach any information they’ve filed to any property they deal with because it’s all in our system,” she said.
What happens when the systems are operational again?: The Treasurer’s Office and the Clerk’s Office will review a backlog.
Once the clerk’s office reopens, Stover said his staff will work as quickly as possible to clear up any backlog that awaits them.
“I have a staff that cares about what they’re doing and when it comes back online – and I don’t think it will be any longer – they’ll be working overtime, they’ll be working constantly,” she said. earlier this week.