I Bipartisan Congressional Real Estate Caucus you call to Federal Housing Finance Agency (FHFA) will suspend its pilot program for title insurance waivers until the plan is reviewed and the agency seeks public comment on it.
The caucus expressed this opinion in a letter written by Reps. Lou Correa (D-Calif.), Mark Alford (R-Mo.), Tracey Mann (R-Kan.) and Brittany Pettersen (D-Colo.) and was sent to FHFA Director Sandra Thompson on Monday.
In an era of apparent political divisiveness, lawmakers on both sides of the aisle have expressed concern about the plan. I The National Council of Insurance Legislators and 14 attorneys general also pushed for it to be abolished.
While the caucus co-chairs wrote that they “applaud” Thompson and the FHFA’s efforts to promote homeownership among low-income Americans, they believe the pilot program will not help achieve the goal of “finding ways to reduce foreclosures responsibly.” costs of homeowners in a safe and healthy manner.’”
In the letter, caucus members argued that the pilot — which they said emphasizes that title insurance is “a premium” — would cause “irreparable harm” to homeowners and mortgage lenders. Lack of title insurance “may expose homeowners and lenders to greater risk of future financial losses, or even the loss of their home,” they wrote.
“Purchasing a home represents the largest and most important acquisition Americans make in their lifetime and purchasing title insurance protects that investment by protecting against financial loss from threats such as unrecorded liens, fraud, and forgery,” the letter said.
According to the book, the average cost of a title claim and associated costs is $26,000. The average number of claims for fraud and fraudulent claims increased to $143,000.
“Therefore, even loans that pass the automatic title review process proposed under Foreclosure remain at high risk of a costly future claim but will not have the protection provided by title insurance. Additionally, the pilot poses an unnecessary risk by removing professional title agents from the renewal process,” the letter said.
The caucus chairs concluded their letter by asking Thompson to answer five questions before the end of the week. These include how the screening program will protect consumers from title risks that are not readily available through public records searches; how FHFA will handle claims arising from test loans; if FHFA has conducted an analysis to understand the potential effects of removing title insurance from foreclosure rates; and who will pay the costs of settling claims that arise.
“Relying solely on automated title searches using public records alone will leave consumers vulnerable to hidden threats not found in other records such as incomplete links, fraud, and forgery,” caucus members wrote. “Title agents, who are trained professionals who collate these various documents and treat defects to ensure clear title, will be removed from the program under the Pilot, leaving consumers at greater risk.”
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