The election-year push to scrap title insurance on certain loans is part of a slate of proposals the White House has unveiled to make housing more affordable.
BY: KATY O’DONNELL
Politico Pro
A White House proposal to save Americans up to $1,500 when refinancing their homes is triggering a bipartisan backlash in Congress.
President Joe Biden pledged in his State of the Union address to eliminate fees on title insurance — the protection that lenders and homebuyers purchase to cover any losses connected to the legal ownership of a home — for federally backed mortgages. Critics say the move, which surprised the industry, will expose consumers and taxpayers to greater risk.
The push to scrap title insurance on certain loans sold to Fannie Mae and Freddie Mac, the giant government-controlled mortgage financiers, is part of a slate of proposals the White House has unveiled to make housing more affordable. They include tax credits to boost construction and encourage homeowners to sell their starter homes. Biden has increasingly voiced concern that high housing costs could undermine the economic argument for his reelection.
Just hours before his address, the Federal Housing Finance Agency, Fannie and Freddie’s regulator, announced a pilot program to waive title insurance requirements for certain “low-risk” refinancing loans. That spurred accusations from opponents in the industry and on Capitol Hill that the administration was meddling with an independent regulator for political reasons.
Three Republicans on the House Financial Services Committee on Friday warned FHFA Director Sandra Thompson that they were planning to investigate.
“We are concerned that the announcement… made in unison with President Biden’s State of the Union claim that he was ‘eliminating title insurance on federally backed mortgages’ reveals a partisan agenda,” they wrote to Thompson in a letter obtained by POLITICO. That, they said, “is in direct contrast to FHFA’s mission and to the detriment of the housing market and broader financial system.”
“The implication that FHFA would undertake an action that could impact the safety and soundness of [Fannie and Freddie] to advance a political talking point is unacceptable,” added the lawmakers.
Signing the letter were Rep. Warren Davidson (R-Ohio), head of the Financial Services housing subcommittee, Rep. Bill Huizenga (R-Mich.), head of the panel’s oversight subcommittee, and Rep. Andrew Garbarino (R-N.Y.), who introduced a bill last year requiring title insurance on all loans sold to Fannie and Freddie.
