It’s been almost 12 months since fanny mae first announced that, under limited circumstances, it would accept lawyer opinion letters in lieu of title insurance. Although there has been much discussion about the pros and cons From title insurance companies and AOL, what hasn’t been clear for most of the past year is how prevalent AOL’s use is becoming.
According to Fannie Mae Performance of the Fair Housing Plan 2022 reportpublished earlier this month, the government-sponsored entity received its first deliveries from AOL during the fourth quarter of 2022. In total, GSE purchased 45 loans with AOL out of a total of 1.151 million loans purchased. throughout the year.
Fannie Mae estimates that homebuyers who used AOL instead of a traditional title insurance policy saved an average of $1,034 compared to homebuyers in the same states who used traditional title policies.
In addition to further developing its AOL program, Fannie Mae is also in discussions with multiple lenders and providers about possible test-and-learn concepts aimed at reducing the cost of title insurance for borrowers. The GSE will end the pilot program opportunity parameters by the end of the third quarter of 2023, according to the report.
Since Fannie Mae’s announcement last April, the American Land Title Association it was a outspoken reviewer of AOL.
“We will continue to share our concerns about Fannie Mae going beyond its mission and getting into the title insurance business. Fannie Mae was not licensed, regulated, or reserved for that purpose.” diana’s grave, HIGH CEO wrote in an email. “Title insurance oversight is the purview of state insurance regulators. He Federal Housing Finance Agency (FHFA) should instruct Fannie Mae to stop this activity, and any company pilot programs should be subject to a robust and transparent public comment process as required by the recently finalized Prior Approval Rule for Business Products at a minimum.”
Despite the concern and ongoing discussions surrounding AOL, many real estate industry observers believe that the impact of Fannie Mae’s actions will be limited.
“The focus of these programs is clearly narrow (to help underrepresented minorities). Also, as Fannie Mae acknowledges, title insurance is a heavily regulated product and the regulation is at the state level,” analysts at Keefe, Bruyette and Woods wrote in an email newsletter. “This makes it difficult to make meaningful disruptive changes.”
