Fannie Mae looks at possibly bypassing title insurance
Program would eliminate requirement for some mortgage lenders
Fannie Mae is looking into a program that would forgo title insurance and attorney opinion letters, according to Housing Wire.
The program would waive the title insurance requirements for some mortgage lenders on loans sold to Fannie Mae, the outlet said.
The government-run company, which backs trillions of dollars of U.S. residential mortgages, would roll out the program in the spring, according to Housing Wire.
Fannie Mae didn’t confirm the report, however.
“We know that closing costs continue to be a barrier for homebuyers — especially among underserved populations and first-time homebuyers,” a Fannie Mae spokesperson said, according to the outlet. “We continue to research options that would lead to cost reductions in a safe and sound manner and help borrowers save money as part of our Equitable Housing Finance Plan. As we’re still in the research phase, we don’t currently have any additional details to share at this time.”
Reports of the plan have drawn opposition from the American Land Title Association.
“We are extremely concerned about the reported Fannie Mae pilot program to waive title insurance requirements for certain transactions. It appears Fannie Mae is moving beyond its charter and mission directly into the title insurance business. It should raise significant alarm bells,” the trade group wrote in an email to Housing Wire. “If the 2008 financial crisis taught us anything, it is that shortcuts to well-established processes pose great risks to our sound, dependable, and trustworthy real estate system, homeowners, and taxpayers. FHFA should halt this activity.”
The report comes on the heels of Fannie Mae announcing last year that, in limited cases, it would accept attorney opinion letters instead of title insurance.
— Ted Glanzer