ALTA Says Any Plan to Reform Housing Finance System Must Preserve Uniform Underwriting Standards

September 11, 2018

Any plan to reform the U.S. housing finance system must preserve the uniform standards currently provided by the Freddie Mac and Fannie, including title insurance, ALTA said in a statement.

On Sept. 6, U.S. Rep. Jeb Hensarling (R-Texas) unveiled a reform plan that would repeal the charters of the government sponsored entities (GSEs). Hensarling  planned to introduce the proposal in a bill titled “The Bipartisan Housing Finance Reform Act,” co-authored with Reps. John Delaney (D-Md.) and Jim Himes (D-Conn.). 

Hensarling’s proposal would allow qualified mortgages backed by a private credit enhancer with capital resources to access the explicit government securitization guarantee provided by Ginnie Mae. The representative believes the plan preserves liquidity and the 30-year pre-payable fixed mortgage.

“While by no means perfect, we offer this proposal as a grand bargain on how to move past an increasingly dangerous status quo: codify an explicit government MBS guarantee into law, coupled with an accountable and effective affordability program in exchange for placing the taxpayer in a catastrophic loss position only diffusing the credit risk beyond two GSEs, and creating market competition,” Hensarling added.

ALTA President Cynthia Blair NTP, said 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,” she said. “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.”

Also last week, the House Financial Services Committee held a hearing focused on the 10-year anniversary of Fannie Mae and Freddie Mac entering conservatorship, and the lack of any legislative reform. During the hearing, Edward J. DeMarco, former acting director of the Federal Housing Finance Agency, noted title insurance as one of several industries over which the GSEs have a broad ability to shape the market. In DeMarco's words, "They have broad reach to all stakeholders whose functions are intended to actually manage and mitigate risk, whether that be a mortgage insurer, title insurer, an appraiser or a lender."

Contact ALTA at 202-296-3671 or