The FHFA Title Insurance Waiver Pilot Program Explained

By Jeff Lender

During his State of the Union address on March 8th, 2024, President Biden announced his administration would be moving forward with a pilot program that would eliminate the requirement to purchase lender’s title insurance for certain refinances on federally backed mortgages. This measure, intended to reduce the cost of refinancing for homeowners, has been met with some pushback from politicians on both sides of the aisle.

“My administration is also eliminating title insurance on federally backed mortgages,” Biden stated in his speech, “When you refinance your home, you can save $1,000 or more as a consequence.”

But will the program be a benefit to homeowners or expose them to unnecessary financial risk? The team at World Wide Land Transfer has an analysis of this pilot program and some insights to share with you on how it could affect homeowners in the future. 

What is the FHFA Title Insurance Waiver Program?

Searching for title insurance for land can be a hassle. Under previous rules, any lender providing money to refinance a mortgage would be required to purchase a lender’s title insurance policy before they would be able to sell the loan to Fannie Mae or Freddie Mac. In most cases, they would pass the cost of this policy along to the homeowner, even though this type of insurance only covers the lender’s interest in providing the loan. Under the newly announced FHFA title insurance waiver program, the requirement for lenders to purchase a title insurance policy will be eliminated for certain federally backed mortgages. Federal officials believe that this will make refinancing more accessible to homeowners who may have been reluctant to seek out better interest rates because of the associated closing costs.

In a press release, Federal Housing Finance Agency Director Sandra Thompson shed some light on the scope of the program.

“The recently approved title acceptance pilot will waive the requirement for lender’s title insurance or a legal opinion on certain low-risk refinance transactions where there is confidence that the property is free and clear of any prior lien or encumbrance,” wrote Thompson, “The pilot only impacts the requirement for a lender’s title policy or AOL and does not impact a borrower’s title risk, since it only applies to certain refinance loans where the borrower has title to the property already.”

Will the FHFA Title Insurance Waiver Program Benefit Consumers?

While it is true that waiving the requirement for lender’s title insurance on refinances will save homeowners the cost of a lender’s title policy premium when they refinance, the FHFA’s program does present a risk to mortgage lenders and American taxpayers. Because title defects can be discovered on properties that were previously thought to be free and clear, lenders, and by extension the government-sponsored entities that back their loans, could be at risk of incurring the cost of resolving any title defects that come up in the future.

The American Land Title Association (ALTA) in a press release called the program a “misguided effort” that would “expose consumers, lenders, and taxpayers to greater financial risk.” ALTA went on to emphasize the negative impact this program would have on the title insurance industry. They also echoed the concerns of members of Congress who believe it could lead to a repeat of the 2008 financial crisis.

While it remains to be seen whether the FHFA title insurance waiver program will be beneficial to consumers, it is important to note that the program’s scope is limited and it is far from permanent. As a pilot program, its requirements could be altered at any time or it could be scrapped entirely (as a similar program was in the past).

Is Title Insurance Necessary?

As we already mentioned, title defects can come up at any time, even on titles that are considered free and clear. Defects like previously unknown heirs and seller impersonation won’t show up on a title search, so waiving the requirement for lenders to insure themselves when refinancing a loan could expose them to tremendous risk. Additionally, while a lender’s title insurance policy does not cover the homeowner for title defects, an owner’s title insurance policy most certainly will. 

Regardless of how you feel about the FHFA title insurance waiver program, we encourage all homeowners and those who plan to buy a home in the future to speak to a title agent about purchasing an owner’s title insurance policy. The one-time cost of an owner’s title insurance policy is relatively low compared to the legal expenses you could be responsible for if a title defect is discovered, and your policy will cover you for the entire time you own your home. It can even cover your legal heirs after you pass away!

Are you searching for title insurance in PA or or If you want to find out more about all the benefits of having an owner’s title insurance policy, get in touch with World Wide Land Transfer today. We work with buyers, sellers, and lenders to help them protect their real estate investments and we can do the same for you in communities all across America. Contact us today. 

World Wide Land Transfer is a service-oriented PA title company with offices in Philadelphia, New York, and Washington, D.C. With a record of going above and beyond, we are trusted to close everything from complex commercial transactions to residential refinance and purchase transactions.