The Monroe County Clerk’s Office recently discovered system design flaws that resulted in approximately $900,000 in overpayments of mortgage tax receipts to the city of Rochester that should have gone to area municipalities.
In 2015, a system to process electronically recorded mortgages was implemented with flaws in design and procedure. This led to thousands of mortgages being attributed incorrectly to the city, requiring a Clerk’s Office employee to make corrections on each document.
The system did not have an audit trail to track those corrections, making employee errors more likely and impossible to detect.
“In their haste to roll out the electronic recording of mortgages, the previous administration didn’t take the time to understand how the mortgages were being delivered to the Clerk’s Office for processing, creating a system that, by its very nature, was recording mistakes,” County Clerk Adam Bello said. “This error almost cost local governments hundreds of thousands of dollars. If the check and balance procedures for mortgages recording in person were in place for the electronic system, this problem never would have happened. Fortunately, we were able to find this mistake and will make sure all of the municipalities owed money receive the funds they are entitled to.”
The city contacted the Clerk’s Office to question an unusually large mortgage tax payment received in December 2018. This prompted Bello to launch an internal review of the mortgage tax recording process. The team discovered the city was benefiting from this system flaw since 2015, receiving almost $1 million more in mortgage tax payments than it was owed.
City officials agreed to return these overpayments. Town officials were alerted to the issue, and the Clerk’s Office will work with the Monroe County Department of Real Property Services to ensure these municipalities receive the lost revenue.
Several dozen undiscovered errors started in 2016 and escalated annually, with the bulk of errors occurring in February-September 2018 when turnover from previous staff led to a misunderstanding as to how the thousands of default errors were being fixed, thereby exacerbating the problem.
“I want to thank city officials for first alerting us to this issue,” Bello said. “It is a great example of government working together to solve problems. Our new computer system, unveiled in September 2018, is much more user friendly and gives our staff the ability to make corrections at multiple points in the system.”
Bello renewed his request for assistance from the New York State Comptroller’s Office to identify procedural issues in his office.