NASHVILLE – Tennessee Attorney General Jonathan Skrmetti has led a coalition of state attorneys general in sending a letter to the Federal Housing Finance Agency (FHFA), expressing concerns over their revived pilot program aimed at removing title insurance requirements from certain loans sold to Fannie Mae.
The original pilot program, initially proposed by the Biden Administration, faced significant backlash from Congress and industry experts. Although abandoned last year, the FHFA recently reintroduced a similar program that continues to raise major concerns about potential fraud and harm to consumers nationwide.
"The affordable housing crisis demands meaningful bipartisan solutions, not shortsighted regulatory overreach," said Attorney General Skrmetti.
In the letter, Attorney General Skrmetti emphasized the critical role of title insurance in safeguarding homeowners from fraudulent activities and exploitation. Contrary to the FHFA's claims, the cost of title insurance is comparable to a monthly subscription to Amazon Prime and provides essential protection against catastrophic financial harm.
The attorneys general outlined several reasons why the revised pilot program should be terminated. Firstly, the FHFA inappropriately approved the program without seeking public input, contradicting its own rule to determine if it serves the public interest. Additionally, the program solely benefits homeowners with "lower risk" refinance loans, neglecting the needs of first-time and low-income homeowners. Furthermore, it fails to address underlying barriers faced by these homebuyers, such as high interest rates and limited affordable housing supply.
Moreover, the pilot program exposes homeowners to potential fraud and abuse, removes protections from liens and alternative claims of ownership, and forces them into an experimental claims resolution process with Fannie Mae, risking property sale or foreclosure. The program also threatens local economies by allowing Fannie Mae to sideline small businesses in communities.
Joining Tennessee in signing the letter are Alabama, Arkansas, Georgia, Indiana, Kansas, Louisiana, Mississippi, New Hampshire, Oklahoma, South Carolina South Dakota Texas Virginia
You can read the letter in its entirety here.
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