Generators and power outages

Widespread local power outages in the aftermath of Hurricane Irene were a reminder of how dependent we are on electricity. Whether it's heating, cooling, refrigeration, communications, entertainment or computer usage, so many key elements of our lives grind to a halt when the power goes out. The question becomes, how much time and effort would be appropriate to expend on preparing for a scenario that happens only occasionally. In the abstract, it's easy to answer that question, "not much" but when you're the one with a refrigerator full of spoiled food, the calculus changes. While the registry certainly requires electricity to operate, today I'll focus on the issues of losing power at home.

A generator seems like the most likely solution but that gets pretty complicated. First you have to decide what appliances you desire to run and then calculate the wattage needed. The simplest setup would be to run an extension cord from the generator - which must be outside when operated - to the appliance to be powered up. That may be a good way to run a sump pump or even a refrigerator, but not much more. There are only so many plug outlets on a generator. A more elaborate solution is to have an electrician install what's called a "transfer switch." This allows you to disconnect the circuits that power certain appliances from your home electrical system and power them completely by plugging the generator into a box installed on the outside of the home. Trying to power the entire house with a generator without the use of a transfer switch is extremely dangerous since power can migrate through the home system up into the outdoor power lines posing an extreme hazard to utility workers.

The most sophisticated approach would be to install a natural gas powered generator that is totally integrated into the home electrical system. This device resembles a central air conditioning unit and can be programed to immediately begin providing the home with electricity when the normal source of power is disrupted.

Most power outages around here last only a few hours, nothing anyone could not endure. But at times, like in the aftermath of the hurricane or back in December 2008 after a severe ice storm, the power has gone out for days at a time. It is for those occasions that a backup electrical system would really be needed.

A snapshot of recent sales

There were more closings than usual conducted here at the registry this past Friday which, since it was the last Friday of the month, was not completely unexpected. While the volume was nowhere near what it would have been during the 2003-2007 real estate boom, there was nevertheless enough to keep us busy. To get a sense of what was going on, I scrutinized the deeds recorded Friday. Here is what I found:

There were 46 deeds recorded in all. 4 in Billerica, 9 in Chelmsford, 4 in Dracut, 1 in Dunstable, 11 in Lowell, 3 in Tewksbury, 8 in Tyngsborough, 3 in Westford and 3 in Wilmington. Besides the location of the properties involved, I tried to discern the purpose of the deed. Thirty-three of the 46 appeared to be arms-length sales; none involved homes that had been obtained by the grantor through foreclosure; one involved a divorce; three established life estates in the grantors; four conveyed property into trust; and five were for other purposes.

Especially noteworthy was the sales prices for many of the homes, particularly those in Westford and Tyngsborough. While I had no prior sales to use for comparison, the raw sales prices were impressive in the context of the overall condition of the real estate market. With tomorrow being the last day of the month (August 31), I expect another busy day, so statistics for the month will be forthcoming in Thursday's post.

Hurricane Irene aftermath

The registry survived the storm intact. In anticipation of a loss of electrical power, on Saturday night we shut down all of our servers here in Lowell, including the one that runs www.lowelldeeds.com. This morning they all started back up without incident so there was no interruption of recording.

Besides these computer issues, we did have a very slight amount of water come into the basement, but it was far less than we've seen before and because of our prior experience, we have everything elevated sufficiently to prevent any damage. The only other storm-related problem was the displacement of a portion of the metal awning that overhangs the front entrance of the building (shown above).

Ironically, that awning was constructed many years ago when a chunk of the facade fell onto the stairs narrowly missing some people who were standing there. Rather than fix the facade, the Commonwealth constructed this overhang. Since then, between sheets of metal breaking loose in high winds, and chunks of ice sliding off as soon as the sun emerges after a snowstorm, the awning has created a greater hazard than the facade. For that reason, it would not have been a great loss to have the whole thing torn off by the storm. But most of it stayed in place and with unusual efficiency, the state already has a contractor here giving an estimate for the repairs.

Hurricane related website shutdown

Because of the anticipated arrival of Hurricane Irene and resulting damage on Sunday, we will be shutting down all computer servers at the Middlesex North Registry of Deeds on Saturday, August 27 at 6 pm. Assuming there is power in the building on Monday, August 29, the servers will be powered on at 8 am on that day. This means that the LOWELLDEEDS.COM website will be offline during this time. MASSLANDRECORDS.COM, which is located in a different type of facility, should stay online throughout the event.

Hurricane Irene

The brilliant sunshine outside the courthouse right now provides a sharp contrast with the nasty weather we anticipate this weekend when Hurricane Irene passes through New England. The storm is in the Atlantic now, working its way towards the Outer Banks of North Carolina. From there, it's expected to bounce its way up the east coast, threatening all major population centers. A projected track I saw on New England Cable News this morning took the eye of the storm right through the Greater Lowell area. Fortunately by that time the storm should be reduced to a tropical storm. Even so, high winds and heavy rain are expected here. Hopefully, there any damage won't be serious.

Here's the latest National Weather Service forecast for Lowell starting with today:

Today: Sunny, with a high near 85. West wind around 6 mph.

Tonight: Patchy fog after 2am. Otherwise, partly cloudy, with a low around 63. Light south wind.

Saturday: A chance of showers, mainly after noon. Patchy fog before 11am. Otherwise, mostly cloudy, with a high near 80. Calm wind becoming south between 5 and 8 mph. Chance of precipitation is 40%. New rainfall amounts between a tenth and quarter of an inch possible.

Saturday Night: Showers. The rain could be heavy at times. Low around 67. East wind between 6 and 11 mph. Chance of precipitation is 90%. New rainfall amounts between 1 and 2 inches possible.

Sunday: Tropical storm conditions possible. Showers. The rain could be heavy at times. High near 70. Chance of precipitation is 100%. New rainfall amounts between 2 and 3 inches possible.

Sunday Night: Tropical storm conditions possible. Showers, mainly before 10pm. Low around 62. Chance of precipitation is 80%. New rainfall amounts of less than a tenth of an inch possible.

Monday: Mostly sunny, with a high near 82.

Two new Fed responses to housing crisis

The new York Times reported yesterday that the Feds are contemplating two separate responses to the national housing crisis. Better late than never, I guess, but nothing that the Feds have done thus far under the guise of helping homeowners seems to have had much positive effect. The first program under consideration involves the transition of large numbers of already foreclosed homes into rental properties. The idea here is to prevent or limit a flood of foreclosed properties into the market, an concurrence that would drive down prices of all houses. The second initiative would involve Fannie Mae and Freddie Mac refinancing many existing loans to today's lower rates. The refinancings they have in mind here are those that wouldn't qualify under normal conditions, either because the borrower has credit problems or because the existing loan is underwater. Unfortunately, this sounds much like other programs that have already been tried without much success. This proposal is very attractive to policy makers, however, because large amounts of refinancing to lower rates would leave the effected homeowners with more money in their pockets and create a stimulus measure that did not require any Congressional approval.

United States Cartridge Company

A good portion of registry users are doing historical research unrelated to current real estate matters. I always enjoy assisting these folks in their tasks; sometimes they even share their findings with me. Such is the case with a gentleman interested in a deadly explosion that occurred on July 29, 1903 at the United States Cartridge Company here in Lowell.

According to this monograph by the Lowell Parks and Conservation Trust, here's how the US Cartridge Company came into being:

Established in 1869, the United States Cartridge Company was led by the controversial attorney, politician, and Civil War general Benjamin F. Butler who, at the time, was a Republican congressman from the Fifth Congressional District (Essex County). Butler secured contracts for munitions with the federal government, which aided his fledgling company, initially incorporated with a capital of $25,000. Additionally, the increasing popularity of hunting, especially among the nation’s growing middle class, resulted in an ever-greater demand for shotgun shells and rifle cartridges. The U.S. Cartridge Company quickly grew to rival such major ammunition manufacturers as Remington and Winchester.

The company's main facility was located on Lawrence Street near the intersection with Agawam, but several powder magazines were located further to the southwest in what is now a residential neighborhood bounded by Billerica and Woburn Streets near the Concord River and Route 495 (if you exit 495 at the Woburn Street exit and stop at the combination gas station/Dunkin Donuts right off the exit, you would be very close to the site of the magazines).

On Wednesday, July 29, 1903, tragedy struck when something caused the powder magazines to explode. The effect was devastating. Again, from the Parks and Conservation Trust piece:

The massive blast destroyed or severely damaged about 70 houses in Tewksbury’s Wigginville neighborhood and the shock was felt as far away as Haverhill, where windows broke and doors of homes “swung open with a crash as if by a gust of wind.” A closed-door inquest held at the Lowell Police Court in August was followed by Judge Hadley’s ruling in October that held Paul Butler and his aunt, Blanche Butler Ames, who were the principal partners in U.S Cartridge Company, responsible for the explosion.

I'm not sure what ultimately became of the US Cartridge Company; it certainly exists no more in Lowell. Given the consequences of the explosion, it's surprising that its past existence is not better known.

A call for help for homeowners

Today's editorial in the New York Times, "Homeowners Need Help", makes the very valid point that no economic recovery will occur unless and until there's a recovery of housing. The extent of the wreckage of the housing bust is staggering: 6 million homes have already been through foreclosure; 3.5 million more are in foreclosure now; and more than 14 million homeowners are underwater, half of them by more than 30%.

The Times says the Obama Administration needs better ideas and a more aggressive approach, that the measures tried thus far still make it more lucrative for banks to foreclose than to reduce principal balances. And reducing principal balances, or at least making it possible for those underwater to refinance, is what the Times advocates.

Finding old plans

Periodically I write about various features available on our website. Today the topic is old plans. By old I mean those recorded prior to 1855 which is the date this registry was created by the state legislature. When the registry first opened (in 1855), both record books and plan books started anew with #1. But land in this region was the subject of documents that had been recorded in Cambridge since the early 1600s. All of those documents were recopied in separate books that were divided by town - that being the town in which the land was located in 1855 - and then by a new book and page number.

Plans recorded prior to 1855 were treated differently. Copies were obtained from Cambridge and placed in five different plan books. For some reason, these plan books begin with 00, skip 01, and then go to 02, 03, 04 and 05. Over the years we have made these images available online, but the recent activation of the "new" masslandrecords.com website caused the electronic location of these plan images to change.

Currently, our www.lowelldeeds.com website gives the following instructions: Plans recorded before 1855 were located in plan books numbered 00, 02, 03, 04 and 05. We have renumbered those books 900, 902, 903, 904 and 905 for use on this application. It turns out that these instructions are no longer correct since the images have moved.

Here's how you view images of these pre-1855 plans now: Starting at www.lowelldeeds.com, click on the yellow search box. This opens a new window at masslandrecords.com. Click the link that says "try out the new Masslandrecords". When that opens, slide your cursor over the "search criteria" link at the top of the page. From the "plans" section, pick "unindexed property search." That will cause the search windows to change to "book" and "page." Just enter the book you want (900, 902, 903, 904 or 905) in that field and click "search". That will yield a link to all of the plans in each of those books. The number of plans vary from 10 to 20, so there aren't as many as are in our current record books. Once you have the link to the plan you want, click on it and then click the "view image" tab in the right hand window to view the plan.

Ending home ownership subsidies

An op-ed in yesterday's New York Times by a group of NYU business professors suggested that the United States reconsider the many ways in which the government subsidizes home ownership. Between the Fannie Mae and Freddie Mac twins, the income tax deduction for home mortgage interest and local and state taxes, and the favorable treatment afforded capital gains on the sale of a primary residence, the authors argue that the US subsidy of home ownership costs the government $700 billion over a five year period. Besides this revenue drain, these subsidies also promote negative behavior among homeowners. Mortgages made cheaper by government backing allow individuals to "borrow more than they could afford" which in turn leads to the purchase of houses larger than are truly needed. This ability to become highly leveraged in home ownership was a major factor in the loss of $8 trillion in household net worth during the collapse of the housing bubble. The authors do acknowledge that these subsidies cannot be ended all at once: the shock to the system would be too great. Instead, the country should be weaned off of them gradually, over a ten year period, perhaps.

While this is certainly an interesting proposal, one I think has much merit, the likelihood of it being enacted in the face of widespread support for the subsidies by homeowners and hyper intense lobbying by all those whose livelihood is positively effected by these subsidies, is probably quite remote.

Land Court and MERS

MERS - Mortgage Electronic Registration Systems Inc - has been much in the news lately. Questions have been raised as to whether MERS should have been recording assignments for all the mortgages it held as those mortgages (or the underlying note secured by the mortgage) bounced from investor to investor. My understanding has always been that the whole purpose of MERS was to eliminate the need for recording those assignments in the first place. The motivation was not so much to cheat the Commonwealth out of recording fees - which, when MERS was created, were just $10 per assignment, not the $75 charged today - rather, MERS was a pro-consumer measure. During the collapse of the housing bubble in the late 1980s and early 1990s, many banks merged, were sold or collapsed, often taken over by the FDIC. Homeowners often faced an impossible task in trying to obtain assignments and discharges. By retaining the record title of mortgages in a single entity - MERS - it was expected that homeowners would never again have to face the same difficulty in obtaining such documents.

Recently I came across a May 12, 1999 memo from Peter Kilborn, then Chief Justice of the Land Court, that corroborates my recollection of the creation of MERS. Here are some relevant portions of that memo:

MERS is a national electronic registry for tracking servicing rights and beneficial ownership interests in mortgage loans; it also acts as the mortgagee of record and, as such, is the nominee for both the servicer and the beneficial owner of mortgage loans in public land records . . . We have all experienced considerable problems with missing assignments. Hopefully, this system will eliminate these problems in the future.

"The law of defects"

Time to share another email from a registry customer:

Questions 1: What do you consider a "defect" in a deed?

Answer 1: > It's tough to answer that question without you putting it into some context. If the person selling the property fails to sign it, that would be a defect. Same thing if the document was signed but not notarized. There might also be language omitted that could cause a problem but again, that all depends on the context. If you have a specific question, feel free to ask about it.

Question 2: Can a notary sign their own documents? Seems strange when you would want an independent third party (which would be the purpose of a notary). What if the name is different on previous deeds? What if they don't own the property they are selling (or some portion of it)? How is the law of defects applied? I am asking a specific question. What is a defect?

Answer 2: You may be asking a specific question but it's not one I can answer. The law is rarely black and white; usually there's a lot of gray areas so each case is different. That's why I asked you to give me some context for your questions.

As for the follow-ups you do ask, I believe a notary acknowledging his own signature would be a defective acknowledgement for the obvious reason you cite. As for a different name on a previous deed, it depends. Let's say a woman owns a property as Mary Smith but then gets married and takes the name Mary Jones. When she wants to sell the property, Mary Jones may sign the deed. The name is different but it's the same person so there's nothing wrong with that. If Mary Smith and Mary Jones are two different people, then obviously one can't convey the other's property. Finally, there is no "law of defects" that I've ever heard of.

I wish I could have done a better job of responding. Anyone else want to try?

Low rates no guarantee of activity

Today's New York Times reports that even after the Fed's announcement last week that interest rates will remain unchanged at their near historic lows, the amount of borrowing done by consumers remains down. Part of this has to do with a lack of confidence that the economy will improve but other factors include already heavy debt loads being carried by many individuals. Plus, the knowledge that interest rates will remain low for two years suppresses any sense of urgency that people may have to invest sooner rather than later out of fear that the rates may rise.

Our own statistics here corroborate the anemic state of borrowing. In July, the number of mortgages recorded (883) was down 20% from July of 2010 (1105). In the first two weeks of August, the drop off was even greater, going from 480 in August 2010 to 352 in August 2011, a drop of 26%.

A questions about recorded plans

Many visitors to our website use the email link to ask questions about the the registry. Here's one that came in overnight:

I was curious about First Street (AKA Read Street) in Lowell and so picked a deed at random and traced it back. On all the deeds in the chain going back to 1866, there was a reference to a plan by the Proprietors of Lowell Locks and Canals in plan book 00. I had surmised this meant either someone had failed to record the correct plan book and page or that possibly the plan (dated May 1857) predated Book 1 at the North Registry of deeds. After confirming is does, in fact, fall chronologically before the date on Plan 1, Book 1, I typed in plan book 00 just to see what would happen. I was surprised to find I can enter plan book 00, plan number 1 to 741! But as the plan dates span from Feb 1, 1906 and end on May 6, 1986, I really have no idea what these plans represent or why they are all lumped into a plan book that I can't imagine was really started as book 00.

Here's my answer:

There's an explanation in the "plans" section of the main page of our website:

. "M Plans" - Middlesex County layout plans - are available here. Enter 00000 (five zeroes) for the plan book number and then the plan number without the "M"
. Plans recorded before 1855 were located in plan books numbered 00, 02, 03, 04 and 05. We have renumbered those books 900, 902, 903, 904 and 905 for use on this application.

I suspect the plans you were finding were "M" plans which are Middlesex County road layout plans. The instructions say to use five zeroes as the book number, but it probably works with fewer than that. Regarding the second bullet point, 1855 is a crucial date because that is when this registry was created. Prior to that, all documents for this district were also recorded in Cambridge. Sometime after 1855, documents and plans for the towns in the northern district that had already been recorded in Cambridge were copied and placed in separate sets of books here in Lowell. They did not begin with number 1 for either documents or plans, because that number was used for new documents and plans recorded in 1855 going forward. So "Book 1" for both documents and plans begins with things recorded in 1855.

Electronic Recording Update

Electronic recording has long been a routine part of our daily operations and it continues to be so. Periodically it's useful to view our e-recording stats to assess the level of penetration of this method of document recording.

For 2011 from January through July, we have recorded 7459 documents electronically which accounts for 23% of our total recordings. The most common type of document recorded this way is discharges (3197) followed by mortgages (1816) and then deeds (448). The category of "all others" had 1981.

The volume has been steady from month-to-month as is indicated by the following monthly percentages of efiled documents:

January - 23%
February - 24%
March - 24%
April - 21%
May - 22%
June - 22%
July - 25%

Massachusetts settles predatory loan suit

Attorney General Martha Coakley announced yesterday that the Commonwealth had reached a settlement with H&R Block, the new parent company of the former Option One Mortgage Company for predatory loan practices engaged in by Option One during the real estate bubble. Besides providing several million dollars to the state, the bulk of the settlement will go towards reducing the principal and interest of those with the most egregious loans. Borrowers who were required to make "exorbitant payments" at the origin of their loans might also be reimbursed. A story in today's Globe contains all the details.

US credit rating goes down; so do mortgage rates

One of the forecasted fears of a downgrade in the credit rating of the United States was that the rate of interest the country had to pay to borrow money would rise. Because so many consumer loans, from houses to cars to tuition, have interest rates tied to the US rate, any rise in the latter would also increase the former. Well Standard and Poors downgraded the US credit rating the other day and there were immediate economic consequences. The stock market plummeted but investors rushed to US Treasuries. Even with a reduced rating, they still are the safest investment around. And following the laws of economics, with more people buying Treasuries, the interest rate on them went down and so did interest rates on many consumer loans. The weekly average for a 30 year fixed rate mortgage is now an incredibly low 4.39%. Yesterday an attorney told me he was aware of a regional lender offering the same loan for 4.125%. But as this story in today's Washington Post explains, these low rates may only be temporary or, even if sustained, might not be of too much help. Neither consumers nor businesses are optimistic about the state of the US economy and since so much of the housing market is dependent on perceptions, the very low mortgage interest rates won't by themselves spur a recovery in real estate.

Harmon Law Office featured in Globe story

Anyone who frequents registries of deeds these days is familiar with Harmon Law Office, the firm that handles the majority of foreclosure work in this district, at least. From a recording office perspective, documents presented by the Harmon office typically appear properly prepared and present no recurring problems. But a story on the front page of yesterday's Globe raised questions about Harmon's method of doing business. As well as being a law firm, it also has subsidiary corporations that handle title examinations, auctions, and other aspects of the foreclosure process (including several senior people being "vice presidents" of MERS). The story suggests that this consolidation of functions under one roof removes some of the checks and balances inherent in a more distributed arrangement. I suppose Harmon would argue that by providing all necessary services under the umbrella of a single corporate entity, the economy of scale provides cost benefits to everyone involved. While reasonable people can take either side of that argument, the Harmon Office might have more pressing problems: another Globe story earlier in the week reported that the state Attorney General's office was investigating the firm for “unfair and deceptive acts’’ related to the firm’s foreclosure and eviction work.

Bankruptcy case upholds MERS-held mortgage

A recent decision by the US Bankruptcy Court in Worcester, In re Marron (Case No. 10-45395-MSH) reviewed in some detail Massachusetts mortgage law and how MERS fits within it.

In Marron, the bankruptcy trustee opposed a lender’s Motion for Relief from Automatic Stay in order to foreclose a mortgage. The trustee argued that the proposed foreclosure was defective, questioning the legal authority of MERS to hold and assign mortgages. The court rejected that argument, stating that in Massachusetts, “courts have generally held that MERS may both foreclose and assign mortgages held in its name” because Massachusetts does not strictly follow the “mortgage follows the note” rule adhered to by many other states. (Wide variations in property law from state to state help explain why this area of the law defies a coherent nationwide analysis). Massachusetts case law treats a MERS-like separation of the note holder and the mortgagee as a type of trust relationship, with the mortgagee holding only bare legal title for the benefit of the note holder. It’s almost as if MERS used Massachusetts law as a model when establishing itself. Its structure may run afoul of the law in other states, but it would appear to be consistent with existing case law in the Commonwealth. At a minimum, the case against MERS for not recording assignments of mortgages is infinitely more complex than has been portrayed in the media thus far.

Debt Ceiling crisis resolved

With last night's affirmative House vote, it seems that the country's debt ceiling crisis has passed. The Senate is supposed to vote early this afternoon but with apparent widespread (if grudging) support in that body and the expectation that the President will immediately sign the bill, the risk that the US will fail to pay its bills will be eliminated for another 18 months, at least.

A default by the US government would have been disastrous all around. Late or skipped payment by a government would have the same consequences on future borrowing as they would on an individual: increased interest rates. Because so many non-governmental loans from mortgages to car loans to credit card balances have interest rates tied to that paid by the government, a default would have increased everyone's costs. Now the question becomes whether this phase of fiscal austerity by the Federal government will itself have an adverse effect on the economy. More people and entities that care to admit it are dependent, both directly and indirectly, on government spending and the enormous cutback contemplated by this debt ceiling resolution will have some negative consequences. How severe remains to be seen.

July recording statistics

While the recording statistics for July were mixed, the trends were negative when compared to the same month last year. First the good news: The number of deeds recorded was up 8%, the first increase in deeds since January. While many of these were related-party transfers and others were the same of bank-owned, previously foreclosed properties, there still were many arms-length sales which is certainly a good sign. The other positive number was foreclosure deeds: they were down 34%. The problem with this statistic is that the foreclosure deed comes at the end of the foreclosure transaction (unlike the order of notice which comes at the beginning). So following a period of low orders of notice, it would be predictable that months later, foreclosure deeds would also be low.

The bad news for July is in two parts: The number of mortgage dropped 21% compared to July 2010. This is an incredible drop-off and, with the number of deeds recorded up, suggests that home refinancings have dropped off substantially. Because refinancings in a time of stable interest rates are typically been used to pay for home renovations, additions or other consumer items, this decline in mortgages could signal a coming slowdown in the economy. The other negative indicator in July was an increase in the number of orders of notice; these rose 11%. This increase signals a resurgence in foreclosures during the coming months which inevitably will keep prices suppressed and stall the chances of a recovery of the real estate market.