Published by HousingWire | March 9, 2023
The GSE is reported to be looking at launching a pilot program that would grant certain lenders a waiver on title.
The title insurance industry is often bemoaned for being antiquated and making minimal changes, but that has not been the case for the past 12 months.
Nearly a year after announcing that it would begin accepting attorney opinion letters (AOLs) in lieu of title insurance in limited circumstances, Fannie Mae is yet again making waves in the title insurance industry.
According to a report from PoliticoPro, published last Wednesday, the government sponsored entity (GSE) is looking at piloting a program that would bypass traditional title insurance and AOLs all together. The program would grant certain mortgage lenders a waiver on title insurance requirements for loans sold to Fannie Mae and will be rolled out this spring, according to Politico.
Fannie Mae, which currently backs almost $4.1 trillion in U.S. residential real estate mortgages, would not confirm nor deny the rumors.
“We know that closing costs continue to be a barrier for homebuyers – especially among underserved populations and first-time homebuyers,” a Fannie Mae spokesperson wrote in an email. “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.”
The GSE’s Equitable Housing Finance Plans were approved this summer by the Federal Housing Finance Agency.
“The intent was to promote affordable and sustainable housing opportunities for more households nationwide,” Diane Tomb, the CEO of the American Land Title Association, told HousingWire late last year. “One of the goals they outlined in those plans is a push to reduce closing costs, especially for low-income borrowers. Based on those plans, both GSEs are pushing pilot programs promoting the use of attorney opinion letters, reportedly as an alternative to reduce closing costs.”
While the introduction of AOLs frustrated ALTA, Fannie Mae’s latest move has caused major concern for the trade organization.