The sale of Lisa Kloid’s Northeast Baltimore house was moving along quickly. It went under contract in April after less than a month, and the settlement was moved up to accommodate the eager first-time buyers.
Then Kloid’s real estate agent called to tell her the May 7 ransomware attack on city government computers affected more than email and water bills. It had brought Baltimore’s real estate market to a halt. The May 16 settlement on the property was postponed indefinitely.
“I thought, you’ve got to be kidding. We were this close,” said Kloid, whose daughter had been living in the house and had moved out already. “The buyers were supposed to move in last Saturday. It was primed and ready for them to get in.”
Kloid’s home sale was among an estimated few hundred real estate deals caught up in the fallout of the city ransomware attack. After many city computer systems were shut down in the attack, including systems used in real estate transactions, buyers initially were unable to obtain certificates showing there were no liens against properties they’re buying.
Without those certificates, title insurance companies were unwilling to sign off on transactions. On May 13, title insurance companies stopped issuing policies.
By Monday, though, city officials had come up with a manual system for processing the sales, which requires sellers to sign affidavits promising to pay any outstanding debts. But the workaround is slow and there’s a backlog of titles to work through.
“This is a short-term solution to a bigger problem,” said Alan R. Ingraham, CEO of the Greater Baltimore Board of Realtors. “This is stopgap,” he said, as technicians work around the clock to reinstall the computerized system that offers greater certainty and improved protection.
Title office employees have been going in person to a downtown municipal building to pick up certificates showing there are no liens on properties, then hand-delivering or shipping them to the title company.
The coordinated effort between title companies, mortgage bankers and real estate agents is working in its first few days “as well or better than I could have anticipated,” given that it involved an immediate switch from computerized to manual systems, Ingraham said this week.
The goal is to have the computerized system back online by early next week.
Kloid, who lives in Jarrettsville, thought she would have to go downtown to sign an affidavit but found out her title company could forward papers to her, then send them to the city. She signed an affidavit on Monday, and her settlement finally closed Friday. She and her husband had extended the buyers’ contract through the end of June, just in case.
“Hopefully everything will go through,” she said earlier in the week.
By Ingraham’s estimate there are a couple of hundred residential loans pending in the city, not counting commercial or distressed properties, that are caught in the backlog. Often, he said, the second half of the month is a busier time for closings because sellers are trying to pay off loans before payments on new mortgages are due the next month.
The timing couldn’t be worse for Justin and Claire Blome, who spent a year fixing up their house in Butchers Hill to put on the market and just signed a contract with a buyer on Monday. The couple hopes to make an offer on a bigger house in the Highlandtown area in the next week.
“It’s stressful enough figuring this all out,” without the added worry of the computer shutdown, said Justin Blome, 38, who works in marketing at St. Agnes Hospital. “It’s just one more uncertainty after another.”
Fortunately, the buyer on his home requested a later closing date — unrelated to the ransomware, and Blome hopes the lien certificate process will be ironed out by then.
“I guess, the silver lining is we’re all in the same boat,” in the city, he said. “We’re just kind of forging ahead, fingers crossed, which is not where you want to be on the biggest purchase of your life.”
Kloid’s sale almost beat the attack. The title company delivered paperwork to the city on May 2, a Thursday.
“When I called on May 6, I was told by the city, our computers aren’t working right today,” said Kloid’s agent, Ashley Richardson with Long & Foster Real Estate.
The ransomware attack became evident the following day.
Kloid, who extended the buyer’s contract as a precaution, said she feels lucky that her title company had delivered her paperwork to the city by messenger before the system shut down.
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“If they’d emailed it, we’d be up a creek without a paddle,” she said,
Some agents applauded the city’s efforts to act quickly to devise a temporary, manual solution.
While the workaround is not expected to help sales of distressed properties, such as foreclosures, it has paved the way for less complicated deals, said Melissa Evans, a real estate agent with Coldwell Banker, who represents buyers and sellers in the city and Baltimore County.
“My next closing in the city is not until June 7, so I’m crossing my fingers that any hiccups or glitches are all worked out by then, or that we’re back up online,” Evans said. “I don’t anticipate a delay because it’s still two weeks out.”
“I feel good about the direction we’re heading,” she said.
After a week of uncertainty, broker Chris Raborn, said she expects closings on three homes in Canton to go forward as planned at the beginning of June.
“At the moment everything appears to be back on line,” said Raborn, a Towson-based broker with Cummings & Co. “We’ve had wild things happen before that affect the industry. When I started in the business, it was all manual, so I know it can be done.”