ALTA Says White House Attack on Title Insurance Offers False Promise of Savings

Ahead of the State of the Union Address, the Biden Administration released a plan aimed at lowering housing costs, which includes a pilot to waive the requirement for lender’s title insurance on certain refinances.

ALTA called the announcement a purely political gesture offering a false promise of savings for homeowners while exposing consumers, lenders and taxpayers to greater financial risk.

"The approval of this waiver is a hollow attempt by the White House to placate Americans’ current economic frustrations,” ALTA's statement said. “By announcing this only hours before the State of The Union address, without outreach to, or engagement with, the title insurance industry, the Administration has reduced the crucial role of the industry to nothing more than a politicized talking point.”

Since the waiver program was first reported, the Federal Housing Finance Agency (FHFA) has faced strong bipartisan opposition. Several members of Congress asked FHFA Director Sandra Thompson about such a pilot during a May 23, 2023, House Financial Services Committee hearing and expressed concern that Fannie Mae would be expanding outside their charter by operating in a primary market business with this pilot program.

In addition, there is bipartisan support of the Protecting America’s Property Rights Act, which has been introduced in both the Senate and House. The bill would amend the Charter Acts of Fannie Mae and Freddie Mac to require that all loans purchased by the GSEs are protected by a title insurance policy issued by a state licensed and regulated title insurance company. Lead sponsors of H.R. 5837 include U.S. Reps. Andrew Garbarino (R-NY) and Vicente Gonzalez (D-TX), and cosponsors include Young Kim (R-CA), Brad Sherman (D-CA) and Wiley Nickel (D-NC), as well as Del. James Moylan (R-Guam). In the Senate, S. 2687 is sponsored by Sen. John Kennedy (R-LA) and cosponsored by Sen. Katie Britt (R-AL)  

According to the Biden Administration, the waiver pilot would “save thousands of homeowners up to $1,500, and an average of $750. According to analysis from First American, a borrower’s largest life-of-loan costs are property taxes and recording fees, followed by fees paid to the mortgage-backed security (MBS) investor and lender, homeowner’s insurance and fees charged by the government sponsored entities. The fees paid to the GSEs’ are almost six times the cost of title insurance, which is often less than 0.5% of the purchase price of a home.

“In August, Fannie Mae and FHFA confirmed to ALTA that the title waiver pilot program was abandoned – a decision that was clearly overridden elsewhere in the Administration. The Administration should not be playing politics with the American Dream,” ALTA said.

This action is why we need your participation at the upcoming ALTA Advocacy Summit, which will be held May 6-8 in Washington, D.C. Click here for more information.

The Florida Land Title Association will continue to monitor and work with the American Land Title Association on this.