The bipartisan Congressional Real Estate Caucus is urging the Federal Housing Finance Agency (FHFA) to pause its pilot program allowing homebuyers to waive title insurance. Lawmakers argue that this initiative could jeopardize consumer protections by removing the critical safeguards that title insurance provides to homebuyers.
The title insurance waiver pilot program seeks to "reduce closing costs for homeowners in a safe and sound manner," but critics of the program argue that it will do nothing to address the housing affordability challenges facing U.S. homebuyers and will instead harm consumers. On November 18, 2024, the 17 member Congressional Real Estate Caucus sent a letter to FHFA Director Sandra Thompson outline the concerns of the Caucus and urging the FHFA to reconsider the pilot, which has received significant bipartisan pushback since its announcement. "Relying simply on an automated title search using public records alone will leave consumers susceptible to hidden threats not found in other records like unfiled liens, fraud, and forgery," the Caucus members note in their letter.
The Caucus members also point to the recent issue of the Consumer Financial Protection Bureau (CFPB) including title insurance in its Request for Information on "junk fees in mortgage closing costs," a move which could cause consumers to distrust the protection of title insurance and minimize its importance. The Caucus details their concern that, because of this, home buyers may forego title insurance altogether, putting their real estate investment at risk.
Industry groups such as the American Land Title Association (ALTA) echo these concerns, further urging the FHFA to collaborate with experts before implementing significant changes. They stress the the importance of maintaining robust protections for homeowners while seeking true innovations in real estate.
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