Attorneys general from 14 states, most of them in the South, are urging the Federal Housing Finance Agency to back off a pilot program that would remove age-old title insurance requirements from some home loans sold to Fannie Mae.
“The affordable housing crisis demands meaningful bipartisan solutions, not shortsighted regulatory overreach,” Tennessee Attorney General Skrmetti said in a statement about the letter.
The pilot program initially faced pushback from some members of Congress and industry experts, the AG’s news release said. It was abandoned last year, but the housing finance agency has revived it with a similar program. The new plan, designed to save homeowners money on house purchases, would leave home buyers with fewer protections against fraud, errors and alternative claims of ownership, critics have said.
“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,” Skrmetti said.
The FHFA also advanced the program without proper public input, the AGs argued. The plan would mostly benefit homeowners in the lower risk category, neglecting the needs of low-income and first-time homeowners, Skrmetti claimed.
The July 22 letter was signed by attorneys general in Alabama, Arkansas, Georgia, Indiana, Kansas, Louisiana, Mississippi, New Hampshire, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, and Virginia.
“Home title fraud is not an academic risk,” the letter reads. “While title theft is not common, tens of thousands of people have been victimized by deed scams, and even the most famous private home in America is not immune to attempted fraud.”
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