For more than two years, the title insurance industry has had to exist in what professionals have deemed a ”rather challenging” environment. The issues began in April 2022 when Fannie Mae announced it would accept attorney opinion letters (AOLs) on some mortgages in lieu of a traditional title insurance policy.
Things escalated in March 2024 during President Joe Biden’s State of the Union address. Biden announced that the Federal Housing Finance Agency (FHFA) had approved measures to reduce closing costs, including a pilot to waive lender title requirements. The initiative was part of what the Biden administration termed its “war on junk fees,” a moniker the title industry is not fond of.
“I believe this in my heart, not just as a member of this industry, but I think that the title insurance industry has been a little bit misunderstood,” said Mike LaRosa, chief operating officer of Florida Agency Network. “I certainly understand the desire to save homebuyers money and that should be our driver. But I wish that title insurance hadn’t been, in my opinion, inaccurately and unfairly lumped into that junk fee discussion.”
Welcome changes
With a change in administration coming in January after Donald Trump’s victory in the presidential election, many in the title industry are optimistic about the future discourse around title insurance.
“The whole being lumped in with junk fees — I don’t think that is going to happen much anymore,” Chuck Cain, a title industry attorney and the president of Alliance Solutions, said in a statement. “I think there is certainly a difference between an added resort fee at a hotel and title insurance — those are two very different things.”
While no longer being viewed as an unnecessary fee is something industry professionals would like, experts believe there will be other things to look forward to in the near future.
According to Marx Sterbcow, managing attorney of Sterbcow Law Group, the Consumer Financial Protection Bureau’s departure from the junk fee rhetoric will reduce pressure to create alternative title products.
“The alternative title initiatives were largely untested in showing how they protect consumers and the industry at large,” Sterbcow said.
It is this lack of vetting that leads Cain to believe the title waiver pilot program will soon be dead in the water.
“There does not seem to be any sort of groundswell from the GSEs — and certainly not from the mortgage industry or really from any particular groups — to bring those pilot programs to any sort of fruition,” Cain said. “When Fannie first looked at this, before President Biden mentioned it in the State of the Union address, and they looked at how it works, it isn’t as easy as it sounds.”
Another sign that the pilot program may be in trouble came earlier this week when the Bipartisan Congressional Real Estate Caucus sent a letter to FHFA Director Sandra Thompson asking for the cessation of the pilot program until the agency vets it through public input.
The co-chairs of the caucus wrote that they “applaud” Thompson and the FHFA’s efforts to promote homeownership for low-income Americans. But they also believe that the pilot program will not help to achieve the goal of “finding ways to ‘responsibly reduce closing costs for homeowners in a safe and sound manner.’”
The National Council of Insurance Legislators and 14 attorneys general have also pushed for the termination of the pilot program.
Lenient stance
These initiatives, combined with the change in administration, makes former CFPB deputy enforcement director Jeff Ehrlich believe things may be truly looking up for the title industry.
“It is hard to predict, but it is safe to say that an aggressive broadside attack on the title industry is less likely to happen under a Republican administration than if Rohit Chopra were still in office,” Ehrlich said.
In addition to expecting less government pushback against title insurance, some in the industry believe the second Trump administration’s regulatory views will be more lenient than that of the Biden administration.
“The Trump administration’s general policy was to reduce regulatory burdens on industries,” Sterbcow wrote of Trump’s first term “This approach would likely lead to pulling back from federal oversight like the CFPB’s initiatives, focusing instead on state-level regulation. This aligns with a broader philosophy of reducing federal intervention in business operations, allowing the title industry to operate with fewer federal restrictions.
“There’s an underlying tension between consumer protection initiatives (like CFPB’s focus on “junk fees”) and business deregulation. Trump’s policies leaned towards the latter, suggesting a belief that market forces and state regulations are sufficient to handle consumer protection without additional federal intervention,” Sterbcow added.
Despite the expectation of a less aggressive regulatory climate, Sterbcow does not believe the CFPB will completely loosen the reigns. He still expects enforcement actions to occur.
“However, these enforcement actions will likely be focused on existing regulations within the confines of how congress intended these regulations to be enforced as opposed to using regulation by enforcement to push secretive policy making agendas,” he wrote.
“This will bring normalcy and stability back to the industry by allowing companies to focus resources on operations and customer service rather than constantly adapting to shifting interpretations of regulations. When businesses can operate with clear, consistent rules, they spend less on compliance uncertainty and legal interpretation, which typically results in lower costs passed on to consumers.”
Others agree with Sterbcow that historical precedent shows that the Trump administration will be friendlier to businesses. But they aren’t as confident that the frequency of regulatory activity will be all that different under Trump than it has been under Biden.
“I expect the Republican administration to be very active in enforcement, but it is going to look different from a Democratic administration,” Ehrlich said. “They are going to bring more cases involving straightforward violations of the prohibition on deception, and under the enumerated consumer laws like the Truth in Lending Act and the Real Estate Settlement Procedures Act. They’ll bring fewer cases that push the envelope and that are based on the prohibition on abusive conduct.”
Francis Riley, a partner at Saul Ewing LLP, warns that any regulators who leave the federal government may easily find their way into state governments, where they could choose to continue various investigations on a state level.
“There may be a bloodletting of new investigators who have been recently hired, but who will hire them if the regulatory and investigation inertia the CFPB had under the prior administration goes slack? Maybe state attorneys general’s offices,” Riley wrote.
States take charge?
Sterbcow also believes state regulators may step up their regulatory game on the title insurance industry if federal regulators take a step back.
“The focus on title insurance will likely shift back towards state-level oversight as well which is something a lot of state Insurance regulators want back into the fold,” Sterbcow wrote.
He believes this change will come as a relief to many state insurance departments that already feel like the CFPB is trying to “encroach on their regulatory doorstep.”
Ehrlich is also expecting an uptick in regulatory action on a state level. He feels certain that state AGs typically act as stewards of consumer protection when Republican administrations are in charge at the federal level.
“States like New York and California will be more active but not necessarily because their regulators are populated by former bureau officials,” Ehrlich said. “They just tend to step it up when they perceive the federal government stepping back.”
As it looks to the future, the American Land Title Association (ALTA) wrote in an email that it is prepared to collaborate with the Trump administration to protect American home buyers and owners.
“We intend to work closely with the incoming Administration and members of the 119th Congress on a bipartisan basis on thoughtful approaches to housing affordability that focus on the primary drivers of this problem — including solutions that boost housing supply and reduce regulatory burdens to development — so that even more Americans can achieve the American Dream of homeownership,” ALTA’s statement read.
While the past few years may not have been the easiest or smoothest for the industry, Cain believes there is a silver lining.
“A sort of unintended consequence is that I think a lot more people understand title insurance — and that’s something,” Cain said. “A comment I keep hearing in the last year or so is that when people got to meet with lawmakers on Capitol Hill, they are pleasantly surprised when they come into a congressman’s office and they already understand what title insurance is. And that was never the case before.”
