Attorneys general from 14 states jointly sent letter federal housing finance agency (FHFA) Director Sandra Thompson urged an end to the agency’s ownership abandonment pilot program.
The letter, sent Monday, was spearheaded by Tennessee Attorney General Jonathan Schemetti and signed by Alabama, Arkansas, Georgia, Indiana, Kansas, Louisiana, Mississippi, New Hampshire Signed by the Attorneys General of Oklahoma, South Carolina, and South Dakota.
In the letter, officials expressed concerns about a revived pilot program to eliminate title insurance requirements on certain loans. Fannie Mae.
“This pilot program will transfer the title risk for refinanced loans purchased by Fannie Mae from the state-regulated title insurance company to Fannie Mae itself,” the letter states. “Title insurance is a state-regulated industry and if this is maintained, In this state, homeowners will be better served, and we call on the agency to end this misleading pilot program.
The letter highlights the fact that the pilot program was abandoned in the summer of 2023, only to be reinstated in March 2024 after the original pilot program encountered resistance from Congress and the title insurance industry.
The attorney general’s letter claimed that FHFA improperly approved the pilot program without seeking public input. They also point out that the program only benefits homeowners who refinance loans deemed “lower risk” by the Federal Housing Finance Agency (FHFA), and the attorney general claims the program ignores first-time and low-income homebuyers. need.
Additionally, the letter alleges that the pilot program exposed homeowners to potential fraud and abuse, eliminated protections against liens and alternative title claims, and forced them “to enter a completely experimental claims resolution process with Fannie Mae.” , risking the sale of the property or foreclosure.
“While title theft is uncommon, tens of thousands of people have fallen victim to deed fraud, and even America’s most prestigious private homes are not immune to fraud,” the letter reads.
“More commonly, title insurance protects against title defects such as liens or superseding claims of ownership. Title companies invest significant resources in maintaining databases, training staff, and digitizing documents to ensure homeowners have the most accurate title information Even homeowners who are refinancing need title insurance because potential problems, such as boundary disputes or the discovery of unpaid debt, can arise at any time.
