Title Insurance Under Fire: Will Homeowners Really Save?

The Biden administration's recent push to waive lender’s title insurance on certain refinances is drawing sharp criticism from the title insurance industry. The American Land Title Association (ALTA) argues that this move, intended to lower closing costs for homeowners, is more of a political gesture than a real financial benefit. They claim that eliminating title insurance could actually increase risks for consumers, lenders, and taxpayers.

Title insurance plays a critical role in protecting homeowners and mortgage lenders from potential title disputes, fraud, or errors in public records. ALTA warns that removing this requirement could expose buyers to unforeseen legal and financial issues down the line. The group also points out that the title insurance industry contributes $30 billion annually to the economy and supports thousands of small businesses, making this policy shift a potential threat to jobs and economic stability.

This proposal has already faced bipartisan pushback, with lawmakers raising concerns about Fannie Mae overstepping its role in the mortgage industry. While the administration presents this as a cost-saving measure, opponents argue that it undermines consumer protection and could lead to greater instability in the housing market.

As the debate continues, homeowners should be cautious about refinancing under this new policy. While saving money on closing costs sounds appealing, the long-term risks may outweigh the short-term benefits.