Federalism

The Threat to Undermine Property Rights & State Regulatory Authority

Pledge threatens property rights, makes homeownership riskier, and undermines state law governing title insurance.

As part of ALEC’s Women Leadership Series, ALEC Federalism & International Relations Task Force Senior Director Karla Jones and ALEC Health & Human Services Task Force Senior Director Brooklyn Roberts spoke with Elizabeth Blosser, VP of Government Affairs at the American Land Title Association about a commitment President Biden made during the 2024 State of the Union Address.

Following the State of the Union Address, Karla Jones analyzed President Biden’s proposal:

While the President’s motivation to make homeownership more affordable is laudable, his approach doesn’t appreciably lower the cost of buying a home, but it does increase the risk assumed by the purchaser. Transparent discussions about title insurance fees are fair, and making homeownership attainable for more Americans is a positive goal, and there are ways to accomplish it without undercutting state title insurance laws which conform with American federalism. However, this proposal that eschewed an agreed-upon a comment period for stakeholders to weigh in is no way to implement such a consequential policy – especially when the cost to American consumers could be as high as the cost of a home.

The pledge to eliminate title insurance fees on certain federally backed mortgages was a last-minute addition, bypassing the usual transparency and comment period that typically accompanies significant policy changes. Beyond procedural concerns, this policy change enables Fannie Mae to function as a title insurer without complying with state insurance laws and regulations. While the authority to regulate title insurance rests with state insurance commissioners, this policy introduces an unregulated federal title insurance pilot program.

During the interview, Blosser noted:

The President announced in the State of the Union that his administration was doing away with title insurance fees on federally backed mortgages. Obviously, that’s an incredibly broad statement. What we know from FAQs that were released by FHFA is that there is a pilot program that allows Fannie Mae specifically to act as a title insurer on certain refinances. As we understand it, the program uses some sort of automated system to perform a title review and then a lender pays a fee to Fannie Mae in case there’s any title defects down the road. And so really, that is, by definition, title insurance under most state laws.

Watch the full interview here.

Following the State of the Union Address, ALEC’s Karla Jones analyzed President Biden’s proposal:

 


In Depth: Federalism

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