Attorneys general in 14 states have joined together to send a letter to Federal Housing Finance Agency (FHFA) director Sandra Thompson that urges the termination of the agency’s title waiver pilot program.
The letter, which was sent on Monday, was spearheaded by Tennessee Attorney General Jonathan Skrmetti and co-signed by attorneys general in Alabama, Arkansas, Georgia, Indiana, Kansas, Louisiana, Mississippi, New Hampshire, Oklahoma, South Carolina, South Dakota, Texas and Virginia.
In the letter, the officials expressed concerns over the revived pilot program that aims to remove the title insurance requirement for certain loans sold to Fannie Mae.
“The pilot program will shift title risk on refinanced loans purchased by Fannie Mae from state-regulated title insurance companies to Fannie Mae itself,” the letter stated. “Title insurance is a state-regulated industry, and homeowners will be better served if it stays that way. We call on the Agency to terminate implementation of this misguided pilot program.”
The letter highlights the fact that the pilot program was abandoned in the summer of 2023 but revived in March 2024, after the initial pilot program received pushback from Congress and the title insurance industry.
In the letter, the attorneys general claim that the FHFA inappropriately approved the pilot program by not seeking public input. They also note that the program only benefits homeowners who are refinancing loans that the FHFA has deemed “lower risk,” which the attorneys general claim ignore the needs of first-time and low-income homebuyers.
Additionally, the letter claims the pilot program exposes homeowners to potential fraud and abuse, removes protections from liens and alternative claims of ownership, and forces them “into a completely experimental claims resolution process with” Fannie Mae, risking property sale or foreclosure.
“While title theft is not common, tens of thousands of people have been victimized by deed scams, and even the most famous private home in America is not immune to attempted fraud,” the letter stated.
“More commonly, title insurance protects against title defects such as liens or alternative claims of ownership. Title companies invest significant resources in maintaining databases, training workers and digitizing documents to ensure that homeowners get the most accurate title information possible. Even homeowners who are refinancing need title insurance because latent issues, such as boundary line disputes or discovery of unpaid debt, can arise at anytime.”
