On May 7, 2019, Baltimore city government computers1 were infected with a ransomware virus known as “RobbinHood,” which effectively shut down Maryland’s largest city with a population of 600,000. So far, the city officials have declined to negotiate with the hackers who are reportedly demanding 13 bitcoins in ransom. One bitcoin currently trades at just under $8,000 making the total demand approximately $103,000. The situation is further exacerbated by political upheaval in which the former mayor resigned in disgrace due to financial improprieties and a new mayor was sworn in just two days after the attack.
Real estate settlements have slowed to a trickle if anyone is closing at all. This will cause a domino effect as successive downstream transactions are derailed by the inability to close on homes.
Settlement agents report they are unable to verify lien waivers or property taxes, record deeds and security instruments, and verify payment of water bills. Some title insurers have declined to insure transactions or imposed stringent restrictions including escrowing for certain common items such as property taxes, liens, and water bills. Restrictions received from Old Republic Title include the following:
The property must be owner occupied, residential property (Old Republic has not indicated if this is a requirement for the seller, buyer, or both);
The settlement agent must have a lien sheet issued on or before May 7, 2019;
The transaction must close on or before May 24, 2019;
The settlement agent must hold an escrow in the suggested amount of $5,000 – $10,000 (or more) dependingon the transaction.
Insurance to be issued must be in the amount of $500,000 or less.
Settlements in Baltimore county where the city handles the water billing may only close if the seller produces a recent water bill and the settlement agent escrows three times the amount of that bill until city systems are back up and running and the account can be paid.
Additionally, Fidelity Residential Solutions has indicated until the finance and clerk’s offices are able to process payments and accept document for recording, they are not willing to insure title to properties in Baltimore.
Hackers had given Baltimore a deadline of 10 days to pay the ransom or lose all city data. The 10-day deadline is today. Altair will continue to monitor this situation closely; however, please note that these conditions may be revised on little to no notice due to the fluidity of the situation. Also, please recognize the uncertainty involved with different title companies and their underwriters. Please reach out to your Client Services or Business Development representative with any questions.
1 Currently 9-1-1 and emergency services have not been affected.
Altair Global (‘Altair’) has provided this information as a service and convenience for your information only. It is not intended to replace your own legal or financial guidance and/or assistance and you are encouraged to seek the advice of your own tax and legal advisor. Further, the information contained herein is to our knowledge accurate to the extent of the data available to Altair as of the date identified. Altair does not assume responsibility for the accuracy of the contents hereof and is under no obligation to update the material contained herein.