Recently, Fannie Mae has decided to take aim at title insurance – an often-misunderstood, but critically important product that ensures that borrowers have clear ownership rights to a property.
Back in April of 2022, Fannie Mae revised its selling guide, allowing the use of unregulated title insurance alternatives – so called attorney opinion letters (AOLs) – in lieu of title insurance policies in limited circumstances. Since then, Fannie Mae has reaffirmed that it is exploring programs to promote these title insurance alternative products, with a desired goal of reducing costs for underserved borrowers and homebuyers of color. Just a few weeks ago, Fannie Mae announced that it was allowing AOLs on “loans secured by a unit in a condo project” and “loans secured by a property subject to restrictive agreements or restrictive covenants.
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