The

Bipartisan

Congressional
Real
Estate
Caucus
is
calling
on
the


Federal
Housing
Finance
Agency
(FHFA)
to
cease
its

pilot
program
for
title
insurance
waivers
until
the
program
is
vetted
and
the
agency
seeks
public
input
on
it.

The
caucus
expressed
this
view
in
a
letter
written
by
Reps.
Lou
Correa
(D-Calif.),
Mark
Alford
(R-Mo.),
Tracey
Mann
(R-Kan.)
and
Brittany
Pettersen
(D-Colo.)
and
sent
to
FHFA
Director

Sandra
Thompson
on
Monday.

In
an
era
of
obvious
political
division,
lawmakers
on
both
sides
of
the
aisle
have

expressed
concerns
over
the
program.
The

National
Council
of
Insurance
Legislators
and

14
attorneys
general
have
also
pushed
for
its
termination.

While
the
co-chairs
of
the
caucus
wrote
that
they
“applaud”
Thompson
and
the
FHFA’s
efforts
to
promote

homeownership
for
low-income
Americans,
they
believe
that
the
pilot
program
will
not
help
to
achieve
the
goal
of
“finding
ways
to
‘responsibly
reduce
closing
costs
for
homeowners
in
a
safe
and
sound
manner.’”

In
the
letter,
the
caucus
members
argue
that
the
pilot
—
which
they
said
insinuates
that
title
insurance
is
a

“junk
fee”
—
will
cause
“irreparable
damage”
to
homeowners
and
mortgage
lenders.
A
lack
of
title
insurance
“may
expose
homeowners
and
lenders
to
a
heightened
risk
of
future
financial
loss,
or
even
the
loss
of
their
home,”
they
wrote.

“Buying
a
home
represents
the
largest
and
most
important
acquisition
Americans
make
in
their
lifetime
and
purchasing
title
insurance
secures
that
investment
by
protecting
against
financial
loss
from
threats
like
unrecorded
liens,
fraud,
and
forgery,”
the
letter
states.

According
to
the
letter,
the
average
cost
of
a
title
claim
and
associated
expenses
is
$26,000.
The
average
amount
for
fraud
and
forgery
claims
has
jumped
to
$143,000.

“Therefore,
even
loans
that
pass
the
automated
title
review
process
proposed
under
the
Pilot
remain
at
significant
risk
of
a
costly
future
claim
but
will
not
have
the
protections
afforded
by

title
insurance.
Additionally,
the
Pilot
poses
unnecessary
risk
by
removing
expert
title
agents
from
the
refinance
process,”
the
letter
states.

The
caucus
chairs
concluded
their
letter
by
asking
Thompson
to
answer
five
questions
before
the
end
of
the
week.
These
include
how
the
pilot
program
will
protect
consumers
from
title
risks
that
are
not
easily
discoverable
by
a
public
records
search;
how
the
FHFA
will
handle
claims
that
arise
on
loans
acquired
through
the
pilot;
if
the
FHFA
has
performed
an
analysis
to
understand
the
impacts
that
removing
title
insurance
could
have
on

foreclosure
rates;
and
who
will
cover
the
cost
of
rectifying
claims
that
arise.

“Relying
simply
on
an
automated
title
search
using
public
records
alone
will
leave
consumers
susceptible
to
hidden
threats
not
found
in
other
records
like
unfiled
liens,
fraud,
and
forgery,” the
caucus
members
wrote. “Title
agents,
who
are
trained
experts
that
comb
through
these
various
filings
and
cure
defects
to
ensure
a
clear
title,
will
be
removed
from
the
process
under
the
Pilot,
leaving
consumers
vulnerable
to
significant
risk.”

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