What Is the FHFA Title Acceptance Pilot?
- Announced on March 7, 2024, the Federal Housing Finance Agency (FHFA) launched the Title Acceptance Pilot as part of broader efforts by the Biden administration to reduce homeownership and refinancing closing costs.
- The pilot waives the requirement for lender’s title insurance or an attorney opinion letter (AOL) in certain low-risk refinance transactions, specifically those with loan-to-value ratios under 80% and no prior liens or encumbrances.
- Instead of purchasing coverage from a state-regulated title insurer, Fannie Mae (and potentially a fintech vendor) would assume the title risk directly.
- The program is hailed as a way to reduce closing costs, potentially saving homeowners $300–$1,500 per transaction, according to federal estimates.
- FHFA argues that for refinance deals where borrowers already own clear title, title insurance for the lender is redundant and unnecessary.
- Homeowners may still choose to purchase their own title policy or attorney opinion independently—nothing is mandatory under the pilot.
Why the Title Industry Is Skeptical
1. Consumer Protection & Fraud Risk
- The American Land Title Association (ALTA) and 14 state Attorneys General criticize the pilot for shifting risk to Fannie Mae, potentially exposing borrowers to title defects or forgery that tools alone may miss.
- Members of Congress warn that automated public-record review cannot replace expert underwriting, leaving hidden threats like unrecorded liens or fraud undetected.
- ALTA notes that 30% of claims are tied to issues invisible via records alone, which automated systems cannot detect.
2. Federal Overreach vs. State Regulation
- Title insurance is regulated at the state level, long understood as the mechanism to protect property rights. The pilot represents a federal intrusion into a domain historically governed by states.
- Industry groups argue the FHFA lacks both the regulatory authority and the institutional infrastructure to manage title risk effectively.
- Critics say FHFA fast-tracked the pilot without soliciting adequate public comment, deviating from internal rules meant to assess public interest thoroughly .
- Lawmakers and regulators argue the plan disproportionately favors higher-income homeowners, doing little to address affordability for first-time or low-income buyers.
4. Minimal Practical Impact
- Analysts, including Fitch Ratings and BTIG, suggest the pilot’s narrow eligibility—limited to low-risk refinances—is unlikely to dent title insurer revenue or disrupt the industry significantly
- Critics see the pilot as symbolic or political posturing rather than a substantive solution to closing cost concerns.
Response from Policymakers & Stakeholders
- 14 State Attorneys General, led by Tennessee’s AG, formally urged FHFA to terminate the pilot, warning it undermines state oversight and exposes consumers to risk.
- Members of the bipartisan Congressional Real Estate Caucus wrote to FHFA Director Sandra Thompson, calling the pilot faulty and warning of potential financial loss for homeowners and lenders.
- Former ALTA CEO Diane Tomb called the pilot “a purely political gesture offering a false promise of savings”.
| Aspect | FHFA Pilot | Title Industry Concerns |
| Coverage Requirement | Waives lender’s title insurance / AOL for low-risk refis | Exposes homeowners and lenders to unseen title defects |
| Risk Carrier | Fannie Mae or fintech vendor | Unregulated entity lacking robust underwriting infrastructure |
| Benefit Scope | Limited to high-equity, refinance-only transactions | Negligible cost savings; potential for confusion and risk |
| Regulatory Oversight | Federal-driven pilot via FHFA | Conflicts with state-regulated insurance framework |
| Transparency & Public Input | Fast-tracked rollout | Little stakeholder engagement; lacks broad applicability |
Bottom Line
The FHFA Title Acceptance Pilot is an experimental approach intended to reduce costs for selected refinance borrowers by removing a lender’s title insurance requirement. While that may sound beneficial, major stakeholders—including ALTA, state Attorneys General, and key Members of Congress—warn it carries risks:
- It shifts risk from regulated insurers to Fannie Mae.
- It relies on automated title reviews, which can miss hidden title problems.
- It bypasses long-standing state regulatory oversight of the title industry.
- And its limited scale suggests minimal real-world savings, primarily benefiting higher‑equity homeowners rather than helping first-time or low-income buyers.
Title professionals remain highly skeptical that the pilot represents a safe or effective way to reform the industry—and many see it as unnecessary federal overreach.
Please note: Any opinions discussed in this article belong solely to the author, Marissa Berends, and do not necessarily reflect the views of Capitol Lien.
About the Author
Marissa Berends is a Certified Abstractor and Industry Relations Coordinator at Capitol Lien, a nationwide due diligence and risk mitigation services provider. Since joining the company in September 2021, she has earned abstractor certifications in Minnesota, Nebraska, and North Dakota. She is pursuing her Wisconsin Title Examiner certification, which is expected to be completed in Fall 2025.
Marissa is involved with the following groups: Wisconsin Land Title Association’s (WLTA) Convention Committee & Young Title Professionals; Nebraska Land Title Association’s (NLTA) Convention Committee; Property Record Industry Association (PRIA) National Education Committee; Illinois Land Title Association’s (ILTA) Inclusion, Diversity, Equity & Acceptance (IDEA) Committee; and the National Association of Land Title Examiners and Abstractors (NALTEA).
About Capitol Lien
Capitol Lien empowers real estate and title professionals with trusted public record research and due diligence services nationwide. With 35 years of experience, Capitol Lien specializes in fast, accurate property and title searches, lien reports, and document retrieval that help title agents, underwriters, and legal teams operate their businesses with confidence. The Capitol Lien team takes the hassle out of title research with local experts and innovative tools that make it easier to mitigate risk, stay on schedule, and keep your closings moving smoothly.
Learn more at capitollien.com. Ready to simplify your title research? Send your next order to Capitol Lien and experience the difference trusted diligence makes. Stay in touch with Capitol Lien on LinkedIn for industry updates and information. Reach out! contact@capitollien.com or 800-845-4077.
Sources:
Inman: Campaign to stop Fannie Mae title waiver pilot program resumes
National Mortgage Professional: Title Insurance Waiver Pilot Offers ‘False Promises’, ALTA Says
Selling More Real Estate: The FHFA Title Acceptance Pilot: A Misguided Federal Overreach
Alita Group: Cutting Closign Costs: FHFA’s Title Acceptance Pilot Explained
Housingwire: Don’t be fooled, the FHFA title acceptance pilot is simply a misguided federal overreach; Title waiver pilot program will have little impact on the industry: Fitch Ratings; Lawmakers challenge FHFA’s title insurance waiver plan
FHFA: Director Sandra Thompson’s Statement on Title Acceptance Pilot
ALTA: ALTA Applauds Leadership of 14 State Attorneys General Urging Termination of Biden Administration’s Title Waiver Program; 14 Attorneys General Urge FHFA to Terminate Title Waiver Pilot; Bipartisan Congressional Real Estate Caucus Urges FHFA to Halt Title Insurance Waiver Pilot
The Wall Street Journal: White House Revives Plan to Save Homeowners Money on Closing Costs