Title professionals work to provide homeowners and lenders with the long-term protection of their property rights. For a one-time fee, title professionals both identify and resolve title issues at the onset of a home purchase as well as protect homeowners against losses from title defects. While homeowners only have to pay for an owner’s policy once, a new lender’s title insurance policy is required if a homeowner chooses to refinance because title problems could have arisen between the old and new loan, such as having to pay past debt thought to have been paid off. Lenders need assurance that their financial interest is protected, and that is why lender’s title insurance exists.
Title insurance is a comprehensively regulated product in Ohio, but under this pilot, Fannie Mae would be responsible for resolving title issues that arise, something that is far beyond their mission and expertise. The risks from this shift could expose the housing market to more instability, similar to the loosening of standards that preceded the 2008 financial crisis fueled by the overreach of Fannie Mae.
This proposal is deeply concerning – not just for the risks it presents to the housing market, but also for the implications for Ohio’s small businesses and broader economy. According to a recent study, the title industry directly fuels 5,400 jobs and $992 million to Ohio’s gross domestic product (GDP) annually.
Members of Congress from both sides of the aisle share these concerns and have introduced the bipartisan Protecting America’s Property Rights Act, which would require title insurance on all loans purchased by the Government-Sponsored Enterprises (GSEs). I urge Sen. Sherrod Brown and Sen. JD Vance to help pass this bill as well as call on the Biden Administration to rethink this misguided title insurance waiver pilot program.
To be clear: making homeownership more attainable for all Americans is a worthy goal and should be a key priority for the Administration. However, the best way to do that is by addressing the true barriers to homeownership – burdensome regulations and a lack of housing supply.
While saving homeowners a few hundred bucks is a good talking point, the reality is that this pilot program is too risky for Ohio and too risky for the country. Let’s prioritize protecting one of the biggest purchases of a person’s life – a home. Cutting corners could be costly.
Monica Russell is the General Counsel for Erie Title Commercial & Residential Services in Beachwood, OH and the President of the Ohio Land Title Association.
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