The latest on real estate recordings and new technology from the Middlesex North Registry of Deeds in Lowell
August is a popular month for vacations here at the registry, so I usually spend more time than usual working at our Customer Service Counter which gives me a valuable opportunity to assist customers who call or visit the registry of deeds. Those in the real estate related professions typically have straight forward questions, but members of the public often have more complex inquiries.
This summer, many of these calls are requests to “take a name off of a deed” or make some other change to the ownership of property. These calls make it clear that much of the public is under the impression that we here at the registry maintain some kind of master list of who owns what property and that we either cross out or write in names as ownership circumstances change. In response to these questions, we try to provide a simple explanation of the role played by deeds in land ownership. We then explain that to change ownership, a new deed must be created. That leads to the inevitable question, “can I do that myself?” That’s a tough question to answer. Technically, the answer is yes, but we emphasize that real estate law is complex and that one or two words in a deed could completely change the meaning of the document. Because the asset involved - a home, typically - is worth so much money, it’s reckless for anyone to put it at risk by trying their hand at deed drafting to save the cost of hiring a lawyer to do it. Some people see the wisdom of that approach and call an attorney. Others insist that they can’t afford an attorney and will have to do it themselves. At that point, all we can do is suggest they visit a law library for further assistance.
A Globe article earlier this week described the apparent futility of efforts to reduce foreclosures by modifying mortgages that are already in distress. The article cites a new study by the Federal Reserve Bank of Boston which concludes that banks are only willing to help mortgagors who don’t really need the help in the first place and avoid attempts to modify the loans of those in the most financial distress because the bank is likely to lose money on them.
The FRB study, which is available online here, also concludes that securitization does not play a major role in this hesitancy to modify mortgages. By securitization, the study refers to the theory that modifications were not occurring because investors who purchased shares of pooled mortgages were sabotaging such efforts in an attempt to maintain the high initial returns on their investments. The FRB study concludes that mortgages controlled by investors are modified at the same rate as mortgages held by banks, so the data does not support singling out the investors as the cause of the poor incidence of modification.
There is a sense left after reading the study that money from the federal government for mortgage modifications would be more effectively spent by giving it directly to the borrowers for use in making current their delinquent loans rather than giving it to financial institutions (as is now the case) who don’t seem to be using the money for the purposes intended.
This is the first chance I’ve had to write about the new version of masslandrecords.com which was made available to the public alongside the “classic” (or existing) version of MLR. Please take some time to test drive the new MLR and suppress your natural urge to dislike it because it is unfamiliar and new. If you do give it a fair, unbiased evaluation I am confident that you will quickly discern the major improvements in the new as compared to the old.
Back in the summer of 2002, this registry was the first in the Commonwealth to convert to the ACS computer system. By Labor Day of that year, our entire electronic holdings were available online on an ACS-hosted site. After additional registries’ switched to the ACS system, masslandrecords was born and was physically moved to the Secretary of State’s Office in Boston where it has resided ever since.
From the very beginning, website users have expressed an unreserved preference for the in-registry public search terminals over the web-based search function on masslandrecords. I and my colleagues from other ACS registries have always agreed with this assessment and have been diligently working to make the website function more like the in-registry public access terminals. The new masslandrecords is the result.
Here are some of the items requested by the registers of deeds that have been included in the new masslandrecords: (1) the ability to see all names returned pursuant to a query on the screen at the same time and not just groupings of like names with the number of documents in each group as is the case on the current MLR; (2) the ability to review the data about the document and the document image on the screen at the same time; (3) the ability to easily print the search results, not just the document images; (4) the division of the search functionality into separate pages for “basic” and “advanced.” Frequent users of the registry might not see the value of this last item, but those of us who routinely answer telephone calls from members of the public who are stuck on our website know that the single biggest obstacle to the layman’s use of our website is his propensity to over-populate the search screen and thereby prevent the retrieval of the very document he’s looking for. By initially presenting only a simple name search box, we hope to avoid this kind of consumer obstacle. Full search functionality (fuller than currently exists on MLR) is available on the “search criteria” link on the upper menu bar (in other words, “search criteria” is the “advanced search” we had requested). Finally, despite the presence of links to a “basket” and a “shopping cart”, all data and images on masslandrecords will remain available at no charge. The shopping cart function is built into the system so that registries that already charge for images may continue to do so and still use the same system as everyone else.
So that’s my initial take on the masslandrecords. I think it’s a huge improvement over what we’ve had thus far.
Customers may continue to record documents here in Lowell for the Middlesex South Registry up through Friday, July 24. The Secretary of State’s office will continue to staff a modified version of the satellite office until then (it’s located in what has most recently been the Middlesex North closing room but was formerly the home of Registered Land). After July 24, all walk-in recordings for Middlesex South must be done in Cambridge.
The final closure of the satellite office is scheduled to coincide with the activation of electronic recording in Cambridge. The addition of that service will allow registry-users who are concerned about travel time to and parking expenses in Cambridge to bypass those concerns by shifting their recording methodology to electronic recording. This page of the Middlesex North website contains a summary of the e-recording process as well as points of contact for the four companies that are currently providing e-recording service in Massachusetts (contact info is duplicated below). Anyone interested in learning more about this technology should contact these companies and inquire further.
ERX – Bryan Young – (214) 887-7461 – Bryan.Young@acs-inc.com
Simplifile - Erik Blomquist - (800) 460-5657 - Erik@simplifile.com
Ingeo – Greg Brown – (770) 643-9920 – email@example.com
Stewart Title – Mike Agen – (800) 732-5113 – firstname.lastname@example.org
Although a Middlesex South Satellite Recording Office still exists in Lowell, it is under the management of the Secretary of State’s Office and is currently only scheduled to stay open until Middlesex South activates its electronic recording system (which is expected to occur on or about July 24, 2009). The version of the Satellite Office that was operated by the Middlesex North Registry of Deeds since July 1, 2003 is now closed, having recorded its last document this past Tuesday, June 30, 2009. While a more detailed account of that office’s history will be forthcoming, here are some interesting statistics:
During its six years of existence, the Satellite Office recorded 237,781 documents, an average of 39,630 per year which was 14% of the Cambridge registry’s annual recordings.
The Satellite Office collected $62,455,051 in revenue
The busiest single day was the last day of August of 2003 when 902 documents were recorded.
This past Tuesday, June 30, 2009 (the last day of the Satellite Office’s operation) saw the recording of 440 documents, the highest single day recordings since the last day April of 2004.
While the Satellite Office has on average, handled 12% of all Middlesex South recordings, on the last day of the month, the Satellite Office accounted for 17% of all Middlesex South recordings.
Robert Shiller, a Yale economists, suggests that US housing prices will continue to decline for a long time. He cites the bursting of the Japanese real estate bubble in 1991 and the resulting 15 straight years of declining prices as one example. In the most recent US experience, the bursting of the real estate bubble in 1990-91, it was not until 1997 that US home prices began to rise again. Shiller says that real estate does not follow the traditional rules of economics. In that universe, when the value of an asset declines, owners of the asset tend to sell quickly which allows the bottom of the market and the subsequent rebound to occur in relatively short order. Real estate doesn’t follow this curve for a couple of reasons. Most folks don’t own homes as speculative investments, so it’s an easy jump from home owner to home renter. That kind of switch brings massive lifestyle changes and occurs not for investment reasons, but usually as a result of severe economic stress. Consequently, most people who contemplate selling their home also plan to buy a replacement - they’re not “getting out of the market” like someone who was dumping all of their stock, for example. While a declining market favors home buyers, the home buyer is also a home seller and is thereby punished by that same market. This combination results on a type of paralysis that makes the effects of a declining market linger.
By mid-afternoon last Friday I posted a snapshot of foreclosure-related recordings for the month of May and compared them to May of 2008. Since a few late-afternoon recording might have arrived after that post was written, and because it did not do a like comparison of deeds and mortgages recorded, I’ll do a recap of the month of May here:
For the entire district, the number of deeds recorded in May 2009 (434) declined 12% from the number recorded in May 2008 (495). The number of mortgages, however, rose by 40%, from 1102 in 2008 to 1539 in 2009. The number of foreclosure deeds recorded showed a steep and welcome decline of 71%, dropping from 75 in May 2008 to 22 in May 2009. The number of orders of notice - the first step in the foreclosure process - unfortunately rose by 25%, climbing from 49 to 61.
The statistics for Lowell trended similarly, except for mortgages which declined by 10% (dropping from 253 to 227). Deeds showed a similar decline, dropping 15% from 156 to 132. Foreclosure deeds dropped by 77% (from 48 down to 11) while orders of notice rose by 36%, climbing from 25 to 34.
The Middlesex South Satellite Office in Lowell will close permanently on June 30, 2009. Beginning July 1, 2009, all Middlesex South documents must be recorded in Cambridge.
In light of the state’s fiscal crisis, it is clear that the FY2010 budget will substantially cut the funding for this registry. But financial concerns are not the only reason for closing the Satellite Office. The recent retirement of three of our employees has shrunken our workforce to its lowest level in history. Because of changes in the way we operate (immediately scanning and returning original documents, for instance), the recording process today is much more labor intensive at the point of contact with the customer than ever before. Consequently, continuing to operate the Satellite Office with such reduced staffing levels will degrade the quality of service provided by the Middlesex North Registry, a situation that would be completely unacceptable.
On numerous occasions I’ve written about National Lumber v Lombardi, 64 Mass App 490 (2005) a case in which the Massachusetts Appeals Court held that a document was deemed to be on record when it was “delivered” to the registry of deeds, not when it was indexed and scanned by the registry. The members of the Massachusetts Registers of Deeds Association have been concerned that this holding could alter the longstanding practice that a document is “recorded” when it is entered into the registry’s computer system and not before.
Two identical bills, House #1527 and Senate #1826, are now pending in the state legislature. Here’s the language they both share:
SECTION 1. Section 14 of Chapter 36 of the General Laws, as appearing in the 2006 Official Edition, is hereby amended by striking out the last sentence and inserting the following:
“No deed or instrument shall be considered to have been received by the Register or left for record until said deed or instrument has been approved for recording by the register and an instrument number or document number or book and page has been assigned to said deed or instrument”
Hopefully this amendment will be enacted during this legislative session. I know if no case that has invoked the holding of National Lumber, but I suspect that is only a matter of time.
I’ve been working in the Superior Courthouse in Lowell for the past fourteen years. During that time I’ve passed through the front foyer of the building umpteen times. Sure I’ve noticed the beautiful relief sculptures on both the left and right that adorn the entryway, but not until this morning did I know that these friezes, as they are called, are much more than just decorations. These reliefs are made up primarily of various types of fruit. The artist did not randomly select these, each has a special, unique meaning and was selected for its relevance to the purpose of the courthouse. Here is a list of some of the fruit displayed on the Superior Courthouses Frieze and the meaning attributed to each fruit in art/mythology.
Pears: Virtue and Good works
Lemons: A symbol in art of a friendship gone bad
Grapes: Good works
Pomegranate: Hiden truth
Plums: Faithfulness and Independence
Apples: A symbol of family
As part of our ongoing consolidation of the physical layout of the registry of deeds, we have taken all certificate books beginning with Book 183 (certificate number 36002) out of public circulation. All certificates from 36002 and upward (these begin in mid-May 2002) were created on our current computer system as were the corresponding memoranda of encumbrances. Consequently, the certificate and encumbrances visible on our public access computers are identical to those maintained in the books. The registered land staff will continue to maintain the original certificates in paper form, however, they will gradually be shifted from books to filing cabinets. Older certificate books (which are not completely available on computer) will continue to be available for public viewing.
During the past few weeks it seems that there’s been an increase in the number of documents recorded electronically. With more and more registries about to make the leap to electronic recording, I thought it might be helpful to quantify our volume of electronic recordings, probably for 2009 to date. Because that will take a considerable amount of time to compile the statistics, I did a quick snapshot of the first six days of March 2009. Here’s what I found:
During five days last week plus yesterday, 13% of the documents we recorded were received electronically (an average of 34 per day). Of the daily total, 66% were discharges, 3% were deeds, 17% were mortgages and other documents accounted for 13%. The first hour of each day is our busiest for electronic recording. During the 8:30 to 9:30 am hour, 42% of that days e-recordings are received. The next busiest hour is 2:30 to 3:30 when 14% come in. The least likely time of the day to receive e-recordings is the 9:30 to 10:30 hour - we only receive 4% of the day’s documents during that 60 minutes.
Once I’ve compiled the stats for the multi-month period, I’ll share the results here on the blog.
The lead editorial in today’s New York Times commends President Obama for trying to help the 13.6 million Americans who owe more on their mortgages than their houses are worth, but the paper also condemns his approach. Obama wants to reduce the interest rates on these loans and thereby reduce the monthly mortgage payment being made by these homeowners. The Times argues that while reducing the interest rate would reduce the monthly payment, it would still leave an enormous principal balance outstanding. With that dark cloud hovering above their residences, these homeowners have less of an incentive to stay with the home and might tend to just walk away rather than keep paying for something that’s never going to be paid off. I agree that dealing with the problem of “underwater” homeowners is critical, but I’m not sure which of these approaches (or if either) is the correct way to go.
April seems to be the month to change the physical layout of the registry. Last year, April 1 was the date we closed off the lower record hall and shifted to full reliance on electronic versions of our indexes and recorded documents. This April, we plan to move our Registered Land section from its current home in the rear section of the courthouse to our “recording area” in the old upper record hall. The recording counters of both Middlesex North and the Middlesex South satellite office are already in that room, but the rest of the space is currently taken up by a half-dozen small tables the public uses for real estate closings. Come April, our registered land section will move into the space occupied by those tables. (Eventually, a few of the tables will be set up in the area that now houses registered land). Once this move occurs, we envision a continuous “U” shaped counter with the public on the inside of the “U” and our employees positioned around its outside. This will bring almost all of our employees together in the same space and will allow us to work more efficiently in this period of extreme budget constraints. More information about this move will be forthcoming in the days and weeks ahead.
Are you trying to grasp the implications of the Homeowner Affordability and Stability Plan that was just announced by President Obama earlier this week? So are we. Like most things that involve real estate financing, it’s quite complicated and additional details won’t be forthcoming until March 4. In the meantime, one of the best sources of information I’ve found is the White House website. Go there to read an extensive set of questions and answers and to find a fact sheet summarizing how it might work for individual homeowners. In the coming days, we’ll try to digest the plan and determine its implications for real estate in the Northern District of Middlesex County.
During 2008, there were 71 deeds and 4 foreclosure deeds with consideration of more than $1 million recorded at the Middlesex North Registry of Deeds. Here’s how those sales were split among the ten towns in our district:
The foreclosure deeds were for properites in Lowell, Westford, Wilmington and Tyngsborough. Check back later this week when I provide details about the top five sales of 2008.
We have a new President. His 19-minute long inaugural address touched upon the financial crisis that was triggered by the real estate boom and bust (a frequent topic here) and on the place of government in our society. Here are some lines that stood out for me:
“Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age.”
“Rather, it has been the risk-takers, the doers, the makers of things - some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards properity and freedom.”
“Our capacity remains undiminished. But or time of standing pat, of protecting narrow interests and putting off unpleasant decisions - that time has surely passed.”
“The question we ask today is not whether our government is too big or too small, but whether it works . . . Where the answer is yes, we intend to move forward. Where the answer is no, programs will end. And those of us who manage the public’s dollars will be held to account - to spend wisely, reform bad habits, and do our business in the light of day - because only then can we restore the vital trust between a people and their government.”
“What is required of us now is a new era of responsibility.”
We just posted our December 2008 and our cummulative 2008 sales reports on this section of the lowelldeeds.com website. At the end of each month, we generate two sales reports for each of the ten towns in the Middlesex North District. One report is for the month just completed, the other is for the entire year to date including that month. If you’re interested in sales in the town of Billerica, for instance, just follow the above link, go to the “Billerica” line and select “Last Month” from the drop down menu and a PDF file containing the address, price, date and book and page number of each sale of property in Billerica during December 2008 will display. If you instead select “2008″ in the Billerica slot, the page that appears will list all sales for all of 2008 for the town of Billerica.
We also present a list of Orders of Notice (aka “foreclosure filings”) that have been recorded. Because there are far fewer of them than there are deeds, we lump all of the Orders of Notice into the same file and sort them by town. These are also presented for “last month” and year-to-date.
The Globe today writes about “piggyback loans”, those instances where borrowers obtained two mortgages to finance the purchase of a house. As home prices rose towards the stratosphere during the recently ended real estate boom, the two-mortgage approach occurred more often than not. Splitting the purchase price between two mortgages did a number of things: it allowed many to borrow 100% of the purchase price; by keeping the amount of the first mortgage down as a percentage of the total sales price, it eliminated the requirement that the buyer purchase Private Mortgage Insurance; and for the lenders, it produced that many more mortgages that could be farmed out to investors. The problem now is that as many of these homeowners find themselves in fiscally untenable positions, their ability to work out a modification of their mortgage payments is much more complicated because there are now two lenders involved, and what’s in the best interest of lender 1 is often damaging to lender 2 and vice versa.
Our own research has long disclosed the prevalence of this style of lending. In our study of foreclosures conducted in Lowell during 2007, we found that 72% of the foreclosed mortgages that were used to purchase the property involved second mortgages and that the majority of those constituted the entire balance of the purchase price meaning that the borrower put no money down on the transaction. We also found that of the foreclosed mortgages that were used to refinance the property - meaning the borrower already owned the property but obtained a new mortgage that was used to payoff the balance of the first mortgage and provide extra cash for the household - also involved an additional mortgages. A full 36% of the refinanced mortgage foreclosures also had an additional mortgage - popularly called a “line of credit” or “home equity loan” encumbering the property.
In Tuesday’s post I got a head start on our November 2008 to November 2007 comparison of recording statistics for key documents. With the real estate market so slow, the numbers haven’t changed significantly, so please take a look at that post if you’re interested in those figures.
Today I decided to investigate the uptick in the numbers of deeds recorded during these two periods. This month for property in the city of Lowell, we recorded 178 deeds. In November 2007, however, we recorded only 155 deeds for Lowell leading to the reasonable inference that property sales were increasing. Unfortunately, a closer scrutiny of these transactions reveals something different. Of the 155 deeds recorded in November 2007, forty percent of them (62) were for no consideration. These transactions typically involved transfers between family members or into trusts. This means that only 93 of the deeds recorded in November 2007 were for consideration close to the fair market value of the property. While the number of deeds recorded in November 2008 rose to 178, only 94 of them were for consideration close to the fair market value of the property. The remaining 84 were for no consideration. These figures suggest that the higher number of deeds recorded this November is not indicative of an increase in sales.
More bad news is evident when the sales prices of the deeds that were for full consideration are scrutinized. In November 2007, the median sales price for the 93 sales was $215,000. In November 2008, the median for that month’s 94 sales had dropped to $156,000. The distribution of prices in the two months corroborates this decline:
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