2015 Recording Statistics

The number of documents recorded in all major categories was up in 2015 compared to 2014:

Deeds increased 5% from 6561 in 2014 to 6913 in 2015;
Mortgages increased 21% from 9190 in 2014 to 11148 in 2015
Foreclosure deeds increased 35% from 155 in 2014 to 209 in 2015
Orders of Notice increased 38% from 347 in 2014 to 479 in 2015.

Total documents increased 13% from 53,584 in 2014 to 60,516 in 2015.

New Appeals Court foreclosure case

The Massachusetts Appeals Court just issued its decision in Moronta v Nationstar Mortgage. The case arose when a borrower whose home had been foreclosed and who was then being evicted, counter-claimed on several grounds, including a consumer protection violation claim under MGL c.93A that the lender knew or should have known that the borrower would be unable to repay the loan that was granted. The trial court granted Nationstar's motion for summary judgment on the grounds that there was no issue of material fact and that Nationstar was entitled to judgment as a matter of law.  The Appeals Court disagreed and returned the case to the trial court for further action.

The Appeals Court held that there was a "genuine issue of material fact whether [lender] should have recognized at the outset that borrower was unlikely to be able to repay the refinanced loans at issue" which is the standard set by the Supreme Judicial Court for finding a violation of 93A.

The decision is worth reading if only for background on how the mortgage industry worked during the boom years. The Appeals Court latched onto the terms of the new loan intended to "rescue" the borrower from the terms of the initial loan of which he was in default. The new loan was for 30 years, but the payments were amortized over 50 to reduce the monthly payment amount. This left a balloon payment due at the end of 30 years equal to 90% of the amount of the initial indebtedness, despite the borrower having payed 30 years of monthly payments. While the Appeals Court did not rule that this was a 93A violation as a matter of law, it did say it created a question of fact that was appropriate for further judicial inquiry.

October recording statistics

The total number of documents recorded in October 2015 was up 9% from October 2014 (5085 in Oct 2015 v 4915 in Oct 2014);

Deeds were up 1% (603 in Oct 2015 v 595 in Oct 2014);

Mortgages were up 7% (946 in Oct 2015 v 881 in Oct 2014);

Foreclosure deeds were down 10% (18 in Oct 2015 v 20 in Oct 2014);

Orders of Notice were up 48% (68 in Oct 2015 v 46 in Oct 2014).

Recording a Purchase and Sales Agreement

Yesterday a person tried to record a Purchase and Sale Agreement for property in this registry district. We had to turn them away for two reasons. First, Massachusetts General Laws chapter 184, section 17Astates that "No purchase and sale agreement shall be recorded in any registry of deeds unless such agreement is acknowledged by the parties agreeing to sell such real estate or one of them" and neither of the seller signatures on this P&S were acknowledged. Second, the P&S just identified the land by street address.  I don't think that "360 Gorham Street, Lowell" describes the property with the level of specificity required in a contract for the sale of land. At a minimum, I think a book and page reference to the deed that established ownership in the seller would be required, although the full legal description, or at least a copy of the deed as an exhibit, would probably be better.

Electronic connectivity problems at the registry

We've encountered some connectivity problems during the past 48 hours. Yesterday at about noon, the MassLandRecords website became inaccessible to users. The same outage knocked out our electronic recording capability. Everything within the registry continued to work fine so we were able to record walk-in documents and mail and search the database on our public access computers, but offsite business was shut down for nearly three hours. The IT people at the Secretary of State's office and associated contractors resolved the problem. I'm still not sure what caused it. We resumed full operations at about 2:30 pm so we were out of business for about 2.5 hours.

Today we had a different problem. At about 9:15 am we got error message on all of our computers. They had "lost" the connection with the server that runs our land management software (recording, search, etc). The error resolved itself in only about 4 minutes but it's the second time it has happened. The other was on October 20 which again lasted for only a few minutes. We're not sure what caused these two outages but are concerned that the are indicators that some switch or cable on our internal network may be starting to fail. We've asked the IT people to dig into it to try to preempt a bigger outage.

Because so much of our operations have shifted to electronics, an electrical outage or computer problem have a major impact on us. We could always shift back to a paper-based system but that would only be done with a multi-day outage. 

Legal Implications of Rooftop Solar Panels

Here is an article I wrote for the October 2015 edition of the Merrimack Valley Housing Report, a joint venture of UMass Lowell and the Middlesex North Registry of Deeds. For more information about the Housing Report and to subscribe to it for future delivery to your email inbox, check out MVHR webpage.  Here's my article:

Drive through any neighborhood in Lowell these days and you will notice that the matte gray shingles on many homes have been covered with shiny black solar panels. These systems capture sunlight, convert it to electricity, and use that electricity to power the house’s appliances. Excess electricity is fed back into the power grid with the homeowner getting a credit to be applied against traditional electricity usage which occurs at night when no solar power is being created.

A typical agreement between a solar company and a homeowner lasts for twenty years. During those two decades, the solar company continues to own the solar equipment installed on the homeowner’s rooftop. To protect its property, the solar company records a UCC-1 financing statement at the registry of deeds. This form identifies the property owner, the property address, and the book and page of the property owner’s deed. The purpose of this filing is to notify everyone, especially potential purchasers of the property or lenders about to refinance the homeowner’s mortgage, of the security interest held by the solar company in the rooftop equipment.  

The solar companies vigorously assert that these financing statements are not liens.  Vivint Solar Developer LLC, one of the more active companies in this region, even includes the following language in its UCCs:

COMPANY DOES NOT HAVE A SECURITY INTEREST OR LIEN ON THE PROPERTY. THIS NOTICE SHOULD NOT BE CONSTRUED AS AN ENCUMBRANCE AFFECTING TITLE TO THE PROPERTY. (Capital letters in original).

Another of the primary solar companies in this area, SolarCity, in its Frequently Asked Questions webpage responds to the question, “Is there a lien on the solar home?” with this:

No. What you’ll find on the title of a home with a SolarCity power system is a UCC-1 fixture filing. A UCC-1 fixture filing is not a lien against the home. SolarCity files a Uniform Commercial Code Financing Statement, or UCC-1, on all of our solar energy systems in the real property records where each system is located prior to or when the system is installed. We file the UCC-1 to notify anyone who might perform a title search on the address where the system is located that our property, the solar energy system, is installed on the home. This filing protects our rights as the system’s owner against any mortgage on the real property. If the lender that holds the mortgage on the real property forecloses on our customer’s home, the UCC-1 filing protects our interest in the solar energy system and prohibits the lender from taking ownership of it.

SolarCity goes on to acknowledge that “lenders prefer not to see anything on the title” so SolarCity routinely releases its UCC filing in the case of refinancing and then re-files it after a new mortgage has been recorded.  That SolarCity acknowledges the need to release its position before a lender will extend financing to the homeowner is strong evidence that the UCC filing is in fact an encumbrance on the property.

Besides complicating the refinancing process, a rooftop solar unit might also complicate the sale of one’s home. SolarCity’s website addresses this, offering three options. A property owner may transfer the existing agreement to the new homeowner; pre-pay the 20 year commitment to the solar company; or move the device to one’s new home. The website assures readers that the company will not be an impediment to the sale of a home.

The number of solar-related UCC filings is steadily increasing.  Approximately 1100 of these financing statements have been recorded at the Middlesex North Registry of Deeds with 65% of them coming in 2015 alone. Because these rooftop solar units are so new, their practical effect on owning, refinancing, and selling one’s home has not yet been fully determined. With the standard solar company-homeowner contracts being twenty years in duration, there are many rights and obligations involved. There are also many implications for lawyers, loan officers, brokers and appraisers. Should the standard purchase and sale agreement be revised to reflect the existence of a rooftop solar unit? What if the new buyer is willing to assume the agreement with the solar company but the solar company rejects that? What if the buyer wants nothing to do with solar energy and wants the unit removed? If the unit is removed, what impact will that have on the integrity of the roof? There are many unanswered questions and probably just as many questions that have not yet been identified.

Here in the northeast where energy costs are so high, the idea of powering one’s home with a rooftop solar panel is very attractive. Nothing in this article is intended to detract from that. Nevertheless, there should be a greater discussion of the real estate law consequences of these devices so that homeowners are fully aware of the consequences of adopting this type of energy solution and so real estate professionals are able to successfully navigate the legal and practical challenges posed by this new technology.

2015 recording statistics thru September

With more than three-quarters of the calendar year done, here's a comparison of the number of documents recorded in 2014 and 2015.

The number of deeds recorded from January thru September of 2015 was up 5% from the same period in 2014 (44,980 in 2015 vs 39,498 in 2014);

Mortgages were up 29% (8491 in 2015 vs 6575 in 2014);

Foreclosure Deeds up 24% (138 in 2015 vs 111 in 2014);

Orders of Notice up 35% (334 in 2015 vs 247 in 2014);

Total documents up 14% (44,980 in 2015 vs 39,498 in 2014).

Electronic Recording Statistics

In June, 43% of the documents we recorded were sent to us electronically.  In real numbers, 2886 documents were recorded electronically out of a total of 6707.  That translates into a daily average of 131 out of 305 documents coming to us via electronic recording.

The percentage recorded by electronic recording for the first half of 2015 was 44% or 12252 documents out of 27906.  The six month daily average would therefore be 103 electronic recordings out of a daily total of 235. 

A consistent 20% of our recordings come through the mail which would be an average of 47 documents per day.  That would leave 85 documents, or 36% recorded by walk-in customers.

Closer look at 2015 foreclosures

Earlier this week I wrote posts comparing recording statistics from the first half of 2015 to the first half of 2014 and another comparing recordings in June 2015 to June 2014.  The number of foreclosures was up significantly in both periods which warranted a closer look.  Here's what I found when I scrutinized foreclosure deeds recorded in June 2015 which I reported had risen from 5 to 16, a jump of 220%.

The first thing I found was that there were really only 14 foreclosure deeds during this period.  One property straddled the boundary between Tewksbury and Lowell so it showed up in the index query three different times: as Lowell, Tewksbury and "multiple" towns.  Still, the 14 foreclosure deeds still constitute a 180% increase which is also a worrisome number.

On to a closer look at the individual mortgages involved in these foreclosures:

Four of the mortgages that were foreclosed were obtained at the same time the property was purchased.  One was from 2003, two from 2005, and one from 2006, with down payments of 5%, 11%, 25% and 25%).  Two other mortgages were on properties that had been received by the borrowers as gifts.  One was a $283,000 mortgage from 2004 on a property that was obtained in 1989 for $1; the other was a $287,000 mortgage from 2014 on a property that was obtained in 2009 for $1.

The eight remaining mortgages all involved refinancings in which the borrower had purchased the property earlier with another mortgage, but then obtained a new, post-purchase mortgage which is the one that was foreclosed.  The following list shows the dates and amounts of the mortgages, followed by the dates and amounts of the purchase deeds:

• ·         2003 mortgage of $215,000; 1998 deed of $158,000
• ·        2004 mortgage of $252,000; 2003 deed of $265,000
• ·        2005 mortgage of $185,000; 1999 deed of $97,000
• ·        2005 mortgage of $280,000; 2001 deed of $305,000
• ·        2005 mortgage of $222,000; 2004 deed of $278,000
• ·        2007 mortgage of $389,000; 2005 deed of $360,000
• ·        2007 mortgage of $339,000; 1996 deed of $153,500
• ·        2009 mortgage of $348,000; 2004 deed of $175,000

Mid Year Recording Statistics

Here are some recording statistics for certain types of documents for the first half of 2015 when compared to the same period in 2014:

Deeds were down 1%, dropping from 3045 in 2014 to 3018 in 2015;

Mortgages were up 38%, rising from 3948 in 2014 to 5434 in 2015;

Foreclosure deeds were up 26%, rising from 68 to 86;

Orders of notice were up 21%, rising from 153 to 185;

Total documents were up 13%, rising from 24973 in the first half of 2014 to 28249 in the first half of 2015.

June recording statistics

There were some positive signs for the housing market in our June recording statistics.  When compared to the recording numbers from June 2014:

Deed were up 20% (640 in June 2014 to 769 in June 2015);

Mortgages were up 35% (910 in June 2014 to 1212 in June 2015);

Foreclosure deeds were up 220% (5 to 16);

Orders of notice were up 54% (29 to 31);

Total documents were up 32% (5095 in June 2014 to 6708 in June 2015).

While the increases in foreclosure deeds and orders of notice would be troubling if just the percentage increases were considered, the overall number is still low so it is less troublesome.  At some point I'll take a closer look in a future blog post at these June 2015 foreclosures and determine when the mortgages being foreclosed originated.

Independence Day schedule at the Registry of Deeds

The Middlesex North Registry of Deeds will be open for business on Friday July 3, 2015 and on Monday July 6, 2015 for normal hours.

State law mandates that when a holiday falls on a Sunday, state offices will be closed on that Monday to recognition of the holiday.  The same is not the case when a holiday falls on Saturdays.  When a holiday falls on a Saturday as is the case with the 4th of July this year, government offices do not close on the preceding Friday (or the following Monday).  They remain open on both and employees are granted a floating holiday.

Recording statistics for May

Here are the number of various document types recorded in May 2015 compared to the numbers from the same month last year:

Deeds: There was a 12% decline in the number of deeds recorded, dropping from 572 in May 2014 to 502 in May 2015.

Mortgages: There was a 24% increase in the number of mortgages, rising from 722 in May 2014 to 895 in May 2015.

Foreclosure Deeds: There as a 100% increase in the number of foreclosure deeds, rising from 12 in May 2014 to 24 in May 2015.

Orders of Notice: There was a 7% increase in the number of orders of notice, rising from 29 in May 2014 to 31 in May 2015.

Total Documents: There was a 4% increase in the total number of documents recorded, rising from 4464 in May 2014 to 4643 in May 2015.

SJC addresses bankruptcy and real estate liens

The Massachusetts Supreme Judicial Court in a decision released today clarified the effect of bankruptcy on an existing judicial lien on the debtor's real estate.  The Court held in Christakis v Jeanne D'Arc Credit Union, that unless the bankruptcy court expressly excludes such a lien, the lien survives the discharge in bankruptcy of the debtor.  The court reasoned that Federal bankruptcy law erases the personal liability of the debtor for the debt but it does not automatically erase the liability against the real property that was created when, as in this case, an Execution was recorded against the debtor's property.  So, while creditors cannot pursue any collection activities against a debtor who has been discharged in bankruptcy, the creditor can pursue the sale of the debtor's present or former real property that was encumbered pre-bankruptcy filing with a judicial lien such as an attachment or execution.

Congratulations to Lowell attorney Sandra Boulay who represented Jeanne D'Arc before the SJC.

April recording statistics

Recording statistics for April show some positive trends when compared to April of 2014.  Here are the numbers for the entire registry district:

There were 532 deeds recorded in April 2015, a 7% increase over the 497 recorded in April 2014;

There were 993 mortgages recorded, a 48% increase over the 497 recorded last April;

There were 20 foreclosure deeds, a 43% increase over the 14 recorded last April;

There were 30 orders of notice, a 21% decrease from the 38 recorded last April;

There were 4946 documents recorded; a 17% increase from the 4227 recorded last April.

Patriot's Day

The Registry of Deeds will be closed on Monday, April 21, 2015 in recognition of the Patriot's Day holiday.

"Big Data's Big Dig"

That's what the Boston Globe called the 19-year, $75 million effort of the Massachusetts Trial Court to computerize its operations.  A story in the Sunday, April 12, 2015 Globe reviewed the trajectory of that undertaking.  While some progress has been made, much is left to be done.

Although the various registries of deeds in Massachusetts have done a pretty good job of computerizing operations (the Middlesex North Registry, for example, has every record from 1629 to the present freely available to the public on our website and receives more than 40% of its new recordings electronically), many government offices seem slow to automate operations.  I suspect that many businesses have similar problems, only a business faces less public scrutiny than does a government office so we hear more about failures in the public sector.

My theory for this technology tardiness is that many of the people still in charge are from the pre-computer era and lack a reasonable amount of aptitude when it comes to technology.  In such cases, too much is left to the IT people who, while they may understand technology, might not fully grasp the entire operation of the enterprise.  Computers are, after all, just another tool for a company or government office.  Unless they are integrated into normal operations, they will never be used to their full potential.  Fortunately, this situation does have a limited life-span.  As people who have grown up with computers ascend to top leadership positions, this upper management digital divide will become very rare.

Electronic Recording Volume

The month of March continued our streak of electronic recording volume in excess of 40% of all recordings.  Electronically recorded documents accounted for 44% of all recordings in January, 47% in February, and 42% in March.  Of the 4796 documents recorded in March, 2007 were recorded electronically.  That works out to a daily average of 91 electronic documents to 127 walk-ins or mail-ins.

For the 1st quarter of 2015, we recorded a total of 11,610 documents by all methods; 5108 of them were recorded electronically which is 44%.  Discharges accounted for 1177 of the electronic documents; deeds 462, mortgages 1484, and all other types 1985. 

From all sources we recorded 1215 deeds during that time period .  The 462 that were recorded electronically represent 38% of the total.  Mortgages were much more likely to be recorded electronically: 1484 of 2334 (64%) mortgages recorded came to us electronically. 

Some Relief for Purchasers of Previously Foreclosed Homes

Earlier this year, the Massachusetts Attorney General's Office reached a settlement with Bank of America, Chase, Citi and Wells Fargo that will provide people who bought previously foreclosed homes that are now recognized to have title defects due to missing or late pre-foreclosure assignments with assistance in clearing those defects.

The following is from a release on the AGO's website:

In 2011, the Massachusetts Office of the Attorney General brought suit against the banks for allegedly violating the Massachusetts Consumer Protection Act (G.L. c. 93A, §§ 2 and 4) by foreclosing on homes before receiving an assignment of the mortgage. Under Massachusetts law, a bank, or other foreclosing entity, must strictly comply with the state’s foreclosure laws in order to transfer the ownership of a property through foreclosure. When a party conducting a foreclosure does not strictly follow the foreclosure laws, the foreclosure is “void.”  People who purchase properties after a void foreclosure may have a title defect that could prevent them from refinancing their mortgage or selling the property.

The settlement provides a hierarchy of assistance to be extended to the "downstream purchaser" of these properties by the lender that did the foreclosure.  Some of the options include assistance with making claims against title insurance, with obtaining a deed from the original mortgagor, or with redoing the foreclosure.  This only applies to the four lenders who were parties to this settlement, but they did many foreclosures in Massachusetts so it should provide some assistance to homeowners.  How effective these measures will be remains to be seen.

Taking data hostage

Today's Globe has a story about how computer hackers were able to insert a virus into the computer system of the nearby Tewksbury Police Department and lockup all of the department's computer files.  The article reports that neither the state police nor the FBI were able to crack the virus and, because the department's backup tapes were similarly infected, Tewksbury ended up paying a ransom of $500 and got its data back.

Stories like this reinforce my opinion that it's critical for registries of deeds to continue creating microfilm of recorded documents.  Many scoff at the idea of microfilm, saying it's an obsolete technology but if properly created and stored, it lasts a long time.  While microfilm does have some vulnerabilities, computer viruses aren't among them.