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Title Industry Group: Any Plan to Reform Housing Finance System Must Preserve Uniform Underwriting Standards

We wanted to make sure our readers  saw American Land Title Association’s (ALTA) statement in response to the proposal released by Reps. Jeb Hensarling (R-Texas) and John Delaney (D-Md.) to overhaul the housing finance system. The news got buried amid a deluge of stories about the Supreme Court, the anonymous New York Times Op-ed writer, news about a Korean peace deal and a few other items. However, the future of Fannie Mae and Freddie Mac are just as big a deal to both investors and the public at large. Below a brief look at how GSE reform could impact title underwriting standards, in particular.

ALTA states:

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“ALTA strongly urges preservation of the uniform standards currently provided by the GSEs, including title insurance, in any newly developed housing finance system,” said Cynthia Blair NTP, president-elect of ALTA. “The financial crisis demonstrated that credit underwriting standards were taken for granted and compromised by a race to the bottom. Legal title underwriting standards cannot be compromised or allowed to erode. A federal role in the housing finance system prevents future decay of legal title underwriting standards and protects homeowners, lenders, investors and taxpayers from future losses.

“The United States can tap the wealth locked in the ownership of property because of a system that allows people to use their property as collateral to obtain credit. In the transfer of real estate, trust is built around the services the title insurance and settlement services industry provides to the transaction. There would not be a credit market if there was not trust, and there would be no credit market without the documentation of the transfer of property,” Blair continued. “Any reform plan should recognize the strength of our legal system, support a sound housing finance system and reasonable regulation, and protect consumers’ property rights. Our formal and reliable property records system serves as the bedrock of successful capitalism in the United States.”