May is National Small Business Month in the United States, an opportunity to recognize and promote the work of small businesses and their contributions to the economy. Although often overlooked, small businesses are the economic backbone of this country, creating jobs and generating revenue across the United States.
As an industry made up of small businesses, the title industry not only provides insurance to protect most Americans’ largest investment (their homes), but its local businesses grow the economy and give back to the community. While the Biden administration claims to be “working to promote small business prosperity,” I encourage the administration to preserve the small title insurance business, which makes up 90% of the title industry.
Title insurance provides homeowners and lenders with protection and peace of mind before and after the closing date. Issues such as tax liens, forged signatures, recording errors, or other risks such as fraud have the potential to interfere with the transfer of property ownership. Title professionals are dedicated to resolving issues before buying. The purpose is to prevent any claims. If something goes wrong after the home is turned over, title insurance provides protection for a one-time fee as long as the homeowner owns the property.
With only 70% of public records at the county level digitized, title insurance professionals spend a lot of time resolving title issues. In fact, a recent study found that it takes title professionals approximately 22 hours to complete a standard transaction and 45 hours to complete a more difficult transaction, which accounts for 36% of all transactions.
But beyond the benefits it provides, the title industry supports small businesses, jobs, and the entire U.S. economy. A recent report from Ernst & Young Quantitative Economics and Statistics (QUEST) measured the property rights industry’s direct and broader impact on the U.S. economy. The report states that the title insurance and settlement services industry will directly create $30 billion in GDP and 155,000 jobs for the U.S. economy in 2022, which shows the impact of this industry on local communities. Title agencies also collect $3 billion annually in unpaid federal income taxes, property taxes and unpaid child support.
Recently, the small business fortunes of title insurance professionals have been threatened by the Biden administration’s new pilot program that would waive lenders’ title insurance requirements for certain refinance transactions. Essentially, the plan would transform Fannie Mae and Freddie Mac into federal title insurance companies, replacing the work of mom-and-pop title insurance companies across the country.
Members of Congress from both parties and industry groups have criticized the Biden administration and the Federal Housing Finance Agency (FHFA) for sending misleading messages when it comes to lowering closing costs for Americans. In a recent letter to President Biden signed by 18 members of Congress, members wrote: “While this pilot program is well-intentioned, it will not solve the real problem of housing affordability in our communities and leave homebuyers At risk.
During National Small Business Month and every month, we should be looking for ways to support small businesses in our communities and advocate for policies that support them rather than destroy them.
In the face of economic instability over the past few years, the title industry has continued to create jobs and economic growth across the country while also protecting Americans’ property rights. The federal government should protect small businesses as an important industry.
This column does not necessarily reflect the opinions of the HousingWire editorial staff and its owners.
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