Real Estate Servers' Crash in New Orleans Continues Causing Havoc 6 Weeks Later

This is a computer tale of woe that is just sad, since it is hitting hard already hard-hit New Orleans.

On the 25th of October, both of the Parish of Orleans Civil District Court's computer servers that hold all of the conveyance and mortgage records dating back to 1980's simultaneously crashed. At first, it was assumed that the database records resident on the servers were properly backed-up off-site, but it was soon discovered that this wasn't the case.

According to this long article over the weekend in The Times-Picayune newspaper:

"The company [California-based i365] hired in August 2009 to back up the records had stopped receiving good data in July, and it lost the older data in monthly purges. A batch of fully updated records was recovered, but it was garbled and deemed unusable."

The Time-Picayune article says that i365, which has been contracted to provide the District Court back-up services in August 2009, had been backing up records and purging old copies every 30 days without incident until July. That is when i365 sent an update of its software to be installed. The District Court's small, 2-person IT shop installed the updated back-up software as instructed and received a system message indicating that the install was indeed successful.

However, when the servers crashed, it was quickly discovered that the software install had failed rather than succeeded; proper database back-ups were not being made after all.

Apparently adding to the problem was that the IT staff, in following "instructions from Dell Inc. to troubleshoot the problem to try to get the servers back up and running," accidentally lost or corrupted additional database information.

Paper copies of all the lost digital information do exist, but it is tremendously labor-intensive for title attorneys to go through the thousands of mortgage books and conveyance records New Orleans keeps on file.

A 30-year check of records, the Times-Picayune says, is needed "to determine whether a piece of property is burdened with any liens, lawsuits, court judgments or other legal impediments to a sale" and "any gap in either [the conveyance or mortgage] database leaves a cloud over a property's history and makes title companies queasy about underwriting deals. Title companies can be sued if they guarantee a property has a clear title and it later turns out that it doesn't."

Making matters worse, the computerized indexes to where the required title-related information resides was lost, making current title searches even more difficult and expensive to complete.

This article dated 11 November from New Orleans television station Fox8 noted that the Court announced that all the digital conveyance records from 1985 up to March 27, 2009, and mortgage data through October 25, 2010 - the day of the crash - had been able to be restored. However, it soon became clear that the mortgage data recovered was instead only reliable through August 6, 2009, not October 2010, as first thought.

In all, some 60,000 missing conveyance records and 119,000 missing mortgage records are still needed to be entered back into the District Court's database. It is a laborious and costly data entry process.

As a result of this crash, real estate transactions in New Orleans have been hampered severely, depriving the city of much needed revenue. It is also hampering the city's on-going reconstruction efforts in the aftermath of Hurricane Katrina.

The Times-Picayune article says that:

"The consensus seems to be that if the records can't be fully restored soon, the losses will compound, bankrupting some smaller real estate services companies, depleting the city's tax revenue and quashing important commercial deals."

The Clerk of Civil District Court Dale Atkins is desperate for the missing conveyance and mortgage records to be restored within the next few weeks, but a more realistic appraisal of what is needed is that it will take several months.

Katrina, the BP oil disaster, and now this, which is being called a Katrina of real estate. A lot of pain for one city to endure.

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