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United Wholesale Mortgage, the nation’s largest mortgage lender, has announced that Fannie Mae, which has shaken up the title insurance industry by allowing some homeowners to refinance their mortgages without paying title insurance premiums, I jumped on the pilot program.
UWM has been enthusiastically embracing alternatives to title insurance, launching a Title Review and Closing (TRAC) tool in 2022 that allows lenders to use an attorney opinion in place of traditional title insurance.
In May, UWM launched an expanded version of the program, TRAC+, which provides pricing information to mortgage brokers who agree that UWM will handle not only the title examination, but also the closing and disbursement for customers refinancing existing loans. provided incentives.
Now, UWM, which has adopted an aggressive pricing strategy to overtake Rocket Mortgage as the country’s largest lender in 2022, has announced TRAC Lite.
TRAC Lite offers title insurance waivers through Doma Title to mortgage refinance lenders in seven states: Arizona, California, Colorado, New Jersey, Ohio, Texas, and Virginia, allowing qualifying borrowers to avoid the expense of title insurance. I will make it possible.
This waiver was granted as part of Fannie Mae’s pilot program, in which automated title reviews provide “title insurance for low-risk refinance transactions where you can be confident that the property is free of liens and that no liens exist. and whether it can replace an attorney’s title opinion. Or a burden. ”
Doma, which uses a machine learning platform to automate title and escrow processes, was acquired by Title Resources Group (TRG), a Dallas, Texas-based title underwriting company, on September 27th.
“Doma offers a unique title risk assessment model for refinances that we are proud to offer to our partners, including UWM, to help homeowners reduce the cost they pay for lender title insurance.” said a company spokesperson in a statement.
“Our unique model automates the manual labor that performs the same critical functions as traditional underwriting, resulting in the same risk profile as traditional title at a fraction of the cost,” Doma said. said. “We have long supported innovation in this space to make the process more affordable for homeowners and more efficient for lenders, and that continues today.”
FHFA “Ignores the opinions of policy makers”
The American Land Title Association (ALTA), a trade group for title insurance companies, is pushing back against opponents of pilot programs and other title insurance alternatives supported by the Biden administration and consumer groups, saying they could expand access to homeownership. Leading.
In a Nov. 18 letter to federal regulators of Fannie Mae and Freddie Mac, 17 members of the ALTA-backed Bipartisan Congressional Real Estate Caucus wrote, They called for the pilot program to be halted until proven otherwise.
UWM announced the launch of TRAC Lite on Facebook two days later.
ALTA said in a statement to Inman on Thursday that the pilot program comes as the Biden administration plans to hand over control of Fannie and Freddie’s regulator, the Federal Housing Finance Agency (FHFA), to President-elect Trump next month. He questioned how it would be allowed to proceed. .
“If FHFA allows this pilot program to move forward during this transition period, it will demonstrate that FHFA is not only ignoring the input of policymakers, but also flaunting a pretense of an open and transparent regulatory process. The question arises again,” ALTA said. “Programs that waive title insurance are simply bad for consumers, bad for lenders, and bad for taxpayers, and should be stopped, as a bipartisan group of lawmakers are calling for.”
FHFA approved a “small and limited time” title acceptance pilot program on March 7, and Fannie Mae issued a request for proposals to potential industry participants in June.
However, it is unclear how many financial institutions are participating. Neither Fannie Mae nor FHFA responded to Inman’s requests for comment or for a list of lenders participating in the Title Approval Examination Program.
UWM said in a statement that feedback has been “overwhelmingly positive” since launching TRAC Lite last month.
“With closing costs remaining a significant barrier for borrowers looking to refinance, this innovative product now allows independent mortgage brokers to save their clients thousands of dollars in fees,” UWM said. Ta. “We are excited to continue this momentum and help more consumers achieve their refinancing goals.”
According to UWM’s website, lenders pay a flat fee of $1,600 to participate in TRAC and a settlement brokerage fee of up to $500. The TRAC+ program costs $1,850, but there are no additional clearing agent fees. Participating financial institutions will receive pricing incentives of up to 60 basis points based on loan amount.
Lenders who participate in TRAC Lite pay no title fees, but are not provided pricing incentives and do incur clearing agent fees that range from $375 to $475.
Editor’s note: This article has been updated with a statement from UWM.
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