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Members of the Bipartisan Congressional Real Estate Caucus, which is backed by the American Land Title Association, have announced that a Fannie deal aimed at allowing some homeowners to refinance their mortgages without paying title insurance premiums. It is asking federal regulators to halt May’s pilot program.
The Federal Housing Finance Agency, which regulates mortgage giants Fannie Mae and Freddie Mac, gave the go-ahead on March 7 for a “small, limited-time” pilot program, with Fannie Mae opening the door to potential industry participants in June. A request for proposals has been submitted.
In approving the pilot program, FHFA noted that automated title review “replaces title insurance and an attorney’s title opinion for low-risk refinance transactions where the property is free of any liens or encumbrances. I would like to evaluate whether it is possible.” ”
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But the American Land Title Association (ALTA) has waged a long public relations campaign against pilot programs and other title insurance alternatives supported by the Biden administration and consumer groups, saying they could expand access to homeownership. and is engaged in lobbying activities.
diane’s grave
“Title insurance is the most effective way to protect homeowners and lenders from future financial loss, and no attempt is made to remove these protections,” ALTA CEO Diane Tomb said in a statement Tuesday. Any effort to do so would put them squarely at risk.” “FHFA’s Title Acceptance Pilot is a misguided policy that has received bipartisan backlash from all levels of government.”
The testing plan had previously been criticized as reckless by some Democratic lawmakers and Republican attorneys general in 14 states.
With Republicans expected to take control of the White House and both houses of Congress after the November election, opposition to the Title Acceptance Testing Program has been renewed.
In a Nov. 18 letter to FHFA Administrator Sandra Thompson, nine House Democrats and eight Republicans expressed concerns that the program “does not protect consumers as effectively as title insurance.” They called for the experimental program to be halted “until it is proven to be beneficial to homebuyers.”
“Simply relying on automated title searches using only public records exposes consumers to hidden threats not found in other records, such as unfiled liens, fraud, and forgery.” said the lawmakers.
A Fannie Mae spokesperson referred questions to FHFA. FHFA did not respond to Inman’s request for comment.
This pilot program and other title insurance alternatives are supported by consumer groups such as the Center for Responsible Lending and the National Consumer Law Center, which argue they can help expand access to homeownership. are.
“As housing costs have remained high in recent years and continue to drive inflation, finding ways to expand access to homeownership and maintain stable existing homeownership is essential,” the Thompson Federation of Consumer Advocates said in July. It is extremely important,” he wrote. “Some researchers recognize that mortgage closing costs are an important piece of the puzzle.”
This week, the bipartisan Congressional Real Estate Caucus reviewing the Title Acceptance Examination will include Democrats Lou Correa (California) and Brittany Pettersen (Colorado), Republicans Mark Alford (Missouri) and Tracy・It was launched in May by Mr. Mann (Kansas State).
Numerous housing industry organizations applaud the launch of the Real Estate Caucus, including ALTA, National Association of Realtors (NAR), Mortgage Bankers Association (MBA), National Association of Hispanic Real Estate Professionals (NAHREP), and National Mortgage Insurance Corporation did. (USMI), National Multifamily Housing Council (NMHC), and America Asia Real Estate Association (AREAA).
However, it is unclear where all these groups stand regarding the Title Acceptance Pilot Program and other title insurance alternatives.
In May, United Wholesale Mortgage, the nation’s largest mortgage lender, expanded its Title Review and Closing (TRAC) program, which begins in 2022, will eliminate lender title insurance policies and replace in-house attorneys. supported the attorney’s rights opinion issued by. Check the title document.
This summer, technology provider Arita Group launched a platform that allows title providers to create “up-to-date” attorney opinions that also “enclose” an error and omission insurance policy.
MBA expressed “deep concern” about FHFA’s approval of the Title Acceptance Pilot Program in April. But last year, the MBA published an analysis of the bar-certification opinion by law firm Blank Rome, which concluded: [title insurance and attorney opinion letters] To exist in today’s market. ”
A spokesperson for the group told Inman on Wednesday that MBA does not take a position on alternatives to traditional title insurance. [the Blank Rome] This paper does not endorse MBA’s conclusions. ”
A spokesperson for NMHC also said the group does not take a position on alternatives to title insurance.
USMI declined to comment on title insurance alternatives, but pointed to past statements that pilot programs conducted by Fannie Mae and Freddie Mac should include meaningful input and analysis from industry participants.
NAR, NAHREP and AREA either declined to take a position or did not respond to Inman’s requests for comment.
ALTA has led the public prosecution of both bar admission pilots and bar admission opinions.
ALTA hired public relations firm Marathon Strategies in 2021 to conduct a “corporate rebranding campaign” with the theme “Our Title is Protected.”
The campaign aimed to “educate consumers and policy makers and shape public perception of the industry,” according to the ALTA webinar.
ALTA Federal Election Spending by Party
Source: Federal Election Commission data tracked by OpenSecrets.org.
ALTA has donated $1.01 million to candidates, political action committees (PACs) and political parties in the current election cycle, according to Federal Election Commission filings tracked by OpenSecret. The majority of this spending (54%) went to Republican candidates and committees.
ALTA Lobbying 1998-2024
Source: Senate Archives via OpenSecrets.org.
ALTA’s lobbying budget did not exceed $600,000 until 2021, but it jumped to $1.34 million last year. Title industry trade groups spent $1.23 million on lobbying through Sept. 30 of this year, according to OpenSecret calculations based on data from the Senate Archives.
ALTA also supports House and Senate bills that would require title insurance on mortgages purchased by Fannie and Freddie.
A bill introduced in the House of Representatives in September by New York Republican Rep. Andrew Garbarino (HR 5837) would require lenders selling mortgages to Fannie and Freddie to obtain title insurance, thereby reducing the ownership of conventional mortgages. The law effectively prohibits the use of an attorney’s opinion for liquidation. The bill has 12 Republican and four Democratic co-sponsors.
A companion bill in the Senate, S.2687, introduced by Sen. John Kennedy (R-LA) in July 2023, has two Republican co-sponsors.
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