UWM, Ngcono joined Fannie Mae’s title insurance waiver pilot
The best lenders in the US United Wholesale Mortgage (WM) and The better they have joined Fannie Maea pilot program that waives the lender’s title insurance requirements for certain refinance transactions, HousingWire you are educated.
The plan, announced by President Joe Biden during his State of the Union address in March 2024, aims to reduce shutdown costs as part of his “war on junk money”. I Federal Housing Finance Agency (FHFA) approved the pilot, framing it as a step toward becoming an affordable homeowner.
But this plan has faced a lot of opposition. The title industry, rejecting the label of “junk funds”, says it introduces unnecessary risk to the market. Many hope the Trump administration will not encourage the development. And bipartisan members of Congress we have called for a temporary suspension until a full public review.
Meanwhile, Fannie Mae has begun using the pilot. UWM joined the program in November, Better began offering it to borrowers Wednesday, and sources indicate more lenders are in talks to participate.
A representative for Fannie Mae did not immediately respond to a request for comment.
How does this work?
In the case of the UWM program, which was introduced to our merchant partners on Nov. 20 like TRAC Lite, there is no lender’s title insurance for other term and cash flow funds. The move could be attractive to borrowers as refi rates may increase in 2025 due to expected low rates.
TRAC Lite was initially only available for regular desktop refinancing in four states: Arizona, California, New Jersey and Texas. This week, it was also introduced in Colorado, Ohio and Virginia. It targets loans with a maximum loan-to-value (LTV) ratio of 80% and no title fees. By comparison, UWM’s other programs, TRAC and TRAC+, include tuition fees of $1,600 and $1,850, respectively.
“This is a program that saves buyers money because they don’t need to pay for lenders’ title insurance, and in addition, closing costs, like down payments, are very low,” said Melinda Wilner, UWM’s CEO. “Switching to TRAC Lite has saved me many thousands of dollars [for borrowers] in the state of Texas, where it is more expensive when it comes to title insurance.”
The Fannie Mae pilot program was developed by Better and UWM in partnership Article of Domawhich acts as a settlement agent and is the primary broker behind the title insurance pilot. UWM said its plan includes an agent fee that varies by state, ranging from $375 to $475.
A Doma spokesperson did not respond to requests for comment.
In a statement, the spokesperson for Better said, “We are happy to save this program that can provide consumers. The costs associated with foreclosure can often be very expensive for borrowers, and a title insurance waiver can help provide much-needed relief to families looking for financing.”
The program saves borrowers $1,500 associated with lenders’ title insurance, but requires lenders to pay Fannie Mae a fee of $75 per transaction, according to a source familiar with the agreements between the lenders and the state-backed entity.
“The average fee on repurchases is about 50 basis points, so on a $300,000 loan, that’s about $1,500 in savings for borrowers,” the source said. “Fannie Mae still has that risk because it still has the loan — there’s no need to charge another fee.”
Challenges for the pilot
I American Land Title Association (ALTA) has voiced strong opposition to the plan, arguing that it introduces too much risk to the market and positions Fannie Mae as the primary market insurer — an authority ALTA contends exceeds its mission.
ALTA emphasizes that title insurance plays an important role in protecting against risks that arise between the origination of old and new loans, such as fraud or unsettled debts.
Reflects the concerns of ALTA, i Bipartisan Congressional Real Estate Caucus sent a letter to FHFA Director Sandra Thompson in November, urging the agency to suspend the testing program until it undergoes a thorough evaluation and public comment process.
“If the FHFA allows this testing program to move forward during this transition period, it raises further questions about an agency that not only disregards the views of policymakers but also displays anything resembling an open and transparent regulatory process,” said an ALTA spokesperson.
“Any plan that repeals title insurance is bad for consumers, bad for lenders and bad for taxpayers, and should be stopped as the bipartisan lawmakers have called for.”
But mortgage lenders have dismissed these arguments, saying the risk of a title insurance claim on a refinance loan is too low. Furthermore, this type of title insurance only aims to protect the lender and not the borrower, they noted.
“I have never run a title company. “I know what we’ve had here at UWM in terms of requests for financial statements, and there are none,” Wilner said.
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