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Virtually all local real estate transactions are made through cyber to Fidelity National Title, a Fortune 500 company that owns Humboldt County’s only two remaining title companies, Humboldt Land Title and Fidelity National Title Humboldt. The failed attack has delayed it indefinitely since last Tuesday.
According to Bryn Coryell, president of the Humboldt Association of Realtors and broker owner of Coldwell Banker Sellers Realty (DRE# 01997964) in Arcata, the unexpected closure wreaked havoc on pending escrow closings. This could have a significant financial impact on borrowers.
“At this point, Humboldt County is at a complete standstill,” Coryell said. “We cannot close a single escrow or facilitate the signing of a settlement.”
Coryell spoke only about the impact of the incident in his office, which employs 20 agents. “There are at least three deals that were supposed to close this week, and one or two didn’t close last week.”
After being targeted by a ransomware attack last Tuesday, Fidelity National Title responded by shutting down some systems, which the company says is impacting its mortgage transaction services nationwide. The company explained in a regulatory filing with the Securities and Exchange Commission.
In an email to members of the Humboldt Association of Realtors this morning, Coryell said that as a result of Fidelity’s ongoing internal investigation, it will be necessary to restart each employee’s system access one by one. He explained that it would take time. “This process includes authenticating each unique user and ensuring SEC compliance,” his message explained.
Nearly a week after the attack, local employees at two Fidelity-affiliated title companies are still unable to access the systems needed to complete mortgage transactions, he said.
said a woman who answered the phone to Humboldt Land Title. outpost All inquiries should be directed to Fidelity’s national marketing team. We sent an email and are not waiting for a response as other news organizations have been asking for his answers for over a week.
Meanwhile, the local real estate market came to a screeching halt. A local lending expert, who requested anonymity to avoid dropping any business-related bridges, said the cyberattack has hit Humboldt County especially hard because there is no alternative to Fidelity.
“It’s kind of scary because before there were multiple companies doing the same thing and the land ownership in Humboldt belonged to the employees,” he says. “Fidelity acquired them. Since then, [Humboldt Land Title and Fidelity National] Although they operate under two different names, they are actually one company. Each transaction typically goes through them, so when they go down, we all go down. ”
The lender explained that the interest on the mortgage was paid in arrears. So, for example, the December loan payment will cover the required principal and his November accumulated rent.
“When we take out a loan, [the borrowers] “You start paying interest from the day you fund it, which is usually fine and great,” he said. “But last week, we funded a loan and it was not recorded, so Fidelity/Humboldt Rand can’t track the loan funds and can’t get into the system to record them, so the borrower You will be paying interest on a loan that is not recorded.” Check everything. ”
He hopes title companies will cover the excess interest customers have to pay, but he doesn’t know if that will happen.
Another employee of the financial company said that as a result of loans taken out, borrowers end up losing their down payments, which can cost more than $15,000. “I don’t necessarily believe that banks will recognize that this is an extenuating circumstance,” he said.
Last week, a concerned real estate agent told Coryell that his client was coming to Humboldt County in a 40-foot moving truck and had no idea what would happen if the loan didn’t close.
Mr. Coryell said the local employees at Fidelity’s two title companies have always been top-notch and did their best to cooperate in this case, contacting the company’s higher-ups by phone and requesting a check. I wanted to make it clear that it was delivered to me. earnest money etc. But in most cases, they are locked out of the systems they need to do their jobs.
In most cases, delays in closing a home sale aren’t a big deal, Coryell said. Because a delay of a day or two or even a week won’t make much of a difference in the long run. Upset about having to cancel reservations for cleaning companies, moving vans, and other services.
“The real problem is that people who are financing with loans lose their interest rate lock,” Coryell said. Banks and other mortgage lenders often pre-approve mortgages at guaranteed interest rates, but if the deal doesn’t close within a set period of time, you can lose that guaranteed rate.
If the borrower reapplies, the interest rate could be significantly different, Coryell said.They are [the borrowers] You may not be able to purchase that home because you won’t qualify for that loan. That’s the real kicker. ”
According to an article on techcrunch.com, the ransomware group known as ALPHV (also known as BlackCat) claimed responsibility for the cyber attack in a message posted on the gang’s dark website.
In a message to fellow real estate agents, Coryell said Fidelity management expects the system to be back online by today, but there is no way to know how long it will actually take.
The risks posed by this shutdown grow larger by the day as people wait to complete the biggest financial transaction of their lives.
“We tend to operate on pretty tight schedules,” Coryell says. “This is people’s lives.”