POTUS Shaking up the title industry

KEY POINTS

  • White House pilot program to waive title insurance on refi’s
  • Estimated savings of $1,000 with government specific programs
  • Removal of title insurance could open homeowners up to unnecessary risk
  • ALTA voices distaste for the White House covering bad policy

Of course everyone has heard President Joe Biden’s recent address, and of course there are mixed reviews on his policies. But one that has sparked a much-heated debate inside the Title Insurance industry is the pilot program to alleviate housing costs, eliminating the need for lender’s title insurance in refinancing transactions.

In a quote from President Biden’s address, “the administration is also eliminating title insurance on federally backed mortgages. When you refinance your home, you can save $1,000 or more consequently”.

This move has erupted in controversy within the mortgage lending industry and could face major resistance with trade groups. Regulators vociferously argue reducing title requirements will lower costs, it will in fact open the individual up to increased risks.

In the White House’s address, it stated the Federal housing Finance Agency (FHFA) has endorsed such programs aimed at reducing closing expenses that even include the waiving of title requirements.

Such programs save up to $1,000 for numerous homeowners, with an average of $750, providing substantial relief as rates decline and owners look to refinance. Which seems like a pipe dream at this point seeing as how we are seeing, on average, the highest rates in 14 years.

The specification has been made several times from the FHFA Director Sandra Thompson that the program only targets low-risk refinance transactions involving lender’s title policies or legal opinions and will undergo thorough oversight.

Lenders will also retain the option to establish clear titles through alternative means, such as title insurance or attorney opinion letters (AOLs). Which are essentially, at their core the same as obtaining a thorough audit from a probate attorney or traditional title insurance agency.

The American Land Title Association (ALTA) has loudly stated in a press conference, “the approval of this waiver is a hollow attempt by the White House to placate Americans’ current economic frustrations”.

The Mortgage Bankers Association CEO Bob Broeksmit, echoes the concern that the waiver will undermine consumer protections, increase risk, and reduce competition.

RELATED ARTICLES

More From Our Blog

Wednesday April 10, 2024

10 Common Mistakes in Title Insurance

Do not commit one the most common title insurance mistakes when […]

Read More

Tuesday March 5, 2024

Cash Buyers Highest in 10-Years

Officially the highest number of home buyers, all cash, since 2014. How […]

Read More

Thursday February 29, 2024

Home Buyers Not Ready to Take The Plunge

People want to buy, the inventory is there… So what is stopping the market…

Read More