Earlier
this
month,
President
Biden
during
his

State
of
the
Union
announced
several
initiatives
to
address
housing
affordability
in
our
country.
We
have
long
supported
thoughtful
efforts
to
ensure
greater
housing
opportunity
and
affordability.

Unfortunately,
one
of
the
proposals
the
President
mentioned
in
the
SOTU
was
to
revive
a
previously
discredited
and
shelved

pilot
program
that
would
waive
the
requirement
for
lender’s
title
insurance
on
certain
refinances
by

Fannie
Mae.
Homeownership
is
out
of
reach
for
many
Americans
because
of
the
lack
of
affordable
homes,
regulatory
burdens
to
development,
and
high
interest
rates
–
not
the
cost
of
title
insurance.

By
removing
the
requirement
for
title
insurance
on
these
transactions,
this
program
would
introduce
significant
risk
into
the
market
and
turn
Fannie
Mae
into
a
primary
market
insurer,
expanding
authority
beyond
its
mission
and
charter.

During
a

refinance,
homeowners
receive
a
new
loan,
and
title
insurance
provides
assurance
that
a
lender’s
investment
is
protected.
Title
insurance
protects
against
many
risks
that
may
have
occurred
between
an
old
and
new
loan,
such
as
fraud
or
a
lien
from
a
debt
that
was
not
paid
off.

The
Biden
administration
compared
title
insurance
to
other
lines
of
insurance
that
pay
out
70%
of
premiums
in
claims.
This
is
a

mischaracterization
of
how
our
industry
works
that
is
either
intentionally
misleading
or
simply
misinformed.
The
title
insurance
industry
is
proud
of
its
low
claims
rate
because
of
the
upfront
expenses
and
work
by
title
professionals
to
ensure
homeowners
are
protected.
A
lower
claims
rate
means
that
title
professionals
have
done
a
good
job
of
resolving
title
issues
uncovered
during
the
title
search
process.
In
the
case
there
is
a
claim,
however,
title
insurance
insures
homeowners
and
lenders
against
threats
to
property
rights.

In
2022,
the
industry
paid
more
than
$596.1
million
in
claims.
This
is
up
from
$474.4
million
in
claims
paid
in
2021.
Approximately
one-third
of
all
claims
are
for
issues
that
would
not
be
found
in
a
public
records
search
–
demonstrating
that
title
insurance
could
not
be
effectively
replaced
by
an
automated
search
of
public
records
or
alternative
products
that
don’t
go
beyond
a
public
records
search.

Title
professionals
also
play
a
key
role
in
helping
prevent

fraud.
Impersonation
scams,
elder
real
estate
fraud
and
financial
exploitation,
and
attempts
to
defraud
spouses,
partners
or
other
property
heirs
are
common
schemes
title
insurance
professionals
prevent
by
halting
fraudulent
real
estate
transactions.
Under
Biden’s
plan,
title
professionals
would
be
removed
from
providing
this
key
layer
of
fraud
protection
for
consumers
and
lenders.

According
to
the
proposal,
lenders
will
pay
Fannie
Mae
a
fee
to
cover
the
risk
if
there
is
an
unexpected
title
defect.
Fannie
Mae
is
a
government
sponsored
entity
created
to
provide
liquidity
in
the
secondary
market
focused
on
first-time
homebuyers.
By
law
it
is
not
an
insurer
nor
is
it
capitalized
or
regulated
to
do
this.
Title
insurance
is
comprehensively
regulated
at
the
state
level
and
having
Fannie
Mae
act
in
this
role
is
clearly
outside
of
its

core
mission.

The
last
time
Fannie
Mae
engaged
in
significant
risk
taking,
it
helped
implode
the
housing
finance
system
and
cost
taxpayers
over
$200
plus
billion
in
taxpayer
dollars
in
the
2008.

We
can’t
allow
this
pattern
to
repeat
itself.
Fannie
Mae
remains
in
conservatorship
because
of
behavior
like
this.
During
the
financial
crisis,
we
unfortunately
witnessed
several
systemic
financial
problems
caused
by
shortcuts
to
well-established
processes.
Throughout
that
time,
the
title
insurance
industry
indisputably
proved
its
ability
to
reliably
pay
claims,
many
fraud-related,
even
in
a
severe
recession.

If
that
crisis
taught
us
anything,
it
is
that

underwriting
standards
and
risk-protection
should
be
strong
and
well-tested.
Strong
underwriting
protects
lenders
and
consumers
alike
—
and
title
insurance
provides
a
key
part
of
this
due
diligence.

The
administration
is
targeting
an
industry
that
protects
property
rights
but
there’s
no
conversation
about
further
reducing
fees
charged
by
Fannie
Mae
—
fees
that
are
nearly
six
times
more
than
the
cost
of
title
insurance
over
the
life
of
a
loan.
And
under
this
pilot,
Fannie
Mae
will
collect
another
fee,
while
hurting
an
industry
with
proven
expertise
that’s
comprised
of
90%
small
businesses
and
has
a
workforce
that’s
70%
women.

New
research
conducted
by

Ernst
&
Young’s
Quantitative
Economics
and
Statistics
(QUEST)
team
found
that
in
2022,
the
title
insurance
and
settlement
services
industry
directly
generated
$30
billion
to
the
U.S.
GDP
and
employed
155,000
workers
—
and
those
are
just
the
direct
benefits.
Hundreds
of
thousands
of
additional
jobs
and
billions
more
in
GDP
are
generated
by
suppliers
to
the
industry
and
consumer
spending
that
is
an
outgrowth
of
its
important
work.
This
report,
released
earlier
this
month
by
the

American
Land
Title
Association
(ALTA),
specifically
measured
the
U.S.
and
local
economic
impact
of
the
title
insurance
industry.

Importantly,
the
report
found
that
the
title
industry
collected
$3
billion
in
back
federal
income
taxes,
property
taxes,
and
unpaid
child
support,
to
the
benefit
of
the
communities
across
the
county.
These
recovered
funds
provide
critical
support
for
local
public
programs
and
services
—
including
education,
infrastructure,
and
economic
development. 

This
data
highlights
the
title
insurance
industry’s
important
role
in
fueling
local
economies
across
the
country
as
both
an
employer
and
source
of
consumer
protection.
The
job
of
a
title
insurance
professional
does
not
stop
at
protecting
property
rights
– the
industry
has
also
taken
significant
steps
to

make
homeownership
more
accessible.
Preserving
affordable
housing
is
also
important
because
it
improves
access
to
healthcare,
transportation,
jobs
and
vibrant
communities.

Like
any
industry
with
a
strong
national
and
local
footprint
—
the
title
insurance
industry
has
operations
that
serve
every
county
in
the
country
—
we
believe
it
is
our
responsibility
to
play
an
active
role
and
invest
in
the
communities
we
serve.
Whether
it
be
through
creating
jobs
or
offering
local
grants
to
community
nonprofits
through
our
ALTA
Good
Deeds
Foundation,
the
title
industry
is
committed
to
strengthening
communities
across
the
country.
We’ve
seen
this
movie
before
with
Fannie
Mae
expanding
beyond
its
charter.
We
didn’t
like
the
ending.
Let’s
make
sure
it
doesn’t
happen
again.

Diane
Tomb
is
CEO
of
the American
Land
Title
Association.

This
column
does
not
necessarily
reflect
the
opinion
of
HousingWire’s
editorial
department
and
its
owners.

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