Americans take great pride in owning a home and all that it represents: financial security, the ability to build generational wealth, and the freedom to live the American Dream.
Far more than the right to “the pursuit of happiness,” the great thinkers of the Enlightenment knew that the right to property as essential as life and liberty as the foundation of a free society — principles that are ingrained in our nation’s DNA. With people to this day recovering from the reckless corporate behavior of the 2008 financial crash, those principles are further tested amid overreaching government policies left over from the Biden Administration.
Thankfully, the Trump Administration is rapidly fixing that imbalance, focusing on polices to reduce regulatory burdens to housing development and spur new construction. What they don’t need are bad Biden ideas that add more risk to Fannie Mae like the Title Acceptance Pilot program that would eliminate the protections of title insurance on certain mortgage refinancings.
Title acceptance is a limited pilot program whose stated goal is to “leverage an automated title review process to assess title risk during loan manufacturing and prior to loan purchase.” To save homebuyers money, Fannie Mae wants to remove existing requirements that a lender’s title insurance policy be obtained for certain transactions. Such dispensation is limited to refinance loans with loan-to-value ratios less than 80 percent. By eliminating title insurance, the program claims it could save homeowners between $500 - $1,500.
That all sounds nice – anyone who’s bought a home knows how much money is required all at once. But if you’ll pardon our cliché, the proverbial devil is in the policy details.
This program won’t actually solve the housing affordability crisis, but it will eliminate protections for American homebuyers, obliterate states’ rights, and put the Fannie Mae and taxpayers at greater risk. Insurance is necessary for protecting all parties involved in a potentially precarious capital expenditure. To reference the financial crash again, the reason our markets collapsed is too many people – on Main Street and Wall Street, in DC and in anytown USA – took risks they could not afford.
Title insurance secures Americans’ critical property rights by covering any financial losses the homeowner could incur in the event of a title dispute, such as fraud, forgery, or a tax lien, that could cause them to lose their home. It will also cover legal fees and expenses should anyone make a claim against the property.
The Biden-era pilot program strips these protections away while inserting Washington and Fannie Mae into the business of insurance, an area that federal law expressly delegated to the states. Hence, why there’s also been broad opposition from Attorneys General and policymakers at the state level to this Biden program.
The program was rightly abandoned in 2023 after Congress objected to this uninformed scheme, but then revived by Biden during his last State of the Union address, mentioning this as part of his Administration’s Housing Equity Plans to “crack down on big landlords.”
In eliminating title insurance on certain loans, Fannie Mae assumes the significant risks and costs of any title defects. Or, more accurately, taxpayers now assume the risk just like they unknowingly did in 2008 when the housing market crashed, and Fannie received nearly $200 billion in taxpayer rescue funds.
The Trump Administration and U.S. Federal Housing FHFA are currently laser focused on securing the safety and soundness of Fannie Mae and Freddie Mac after years of mismanagement, overreach beyond their missions, and increased risk-taking. Ending Biden’s Title Acceptance Pilot program is a necessary step toward achieving that goal. No one likes having to pay insurance, but should things go bad no one likes being without it.
Jared Whitley has worked in the US Senate and White House. He has an MBA from Hult business school in Dubai. Recently the Top of the Rockies competition named him the best columnist in the Intermountain West.
