Fannie Mae Follows Freddie Mac Guidance to Allow Limited Use of Title Insurance Alternative

April 12, 2022

In an update to its Selling Guide, Fannie Mae aligned its policy with Freddie Mac and now will accept written attorney opinion letters in lieu of a title insurance policy “in limited circumstances.”

Lenders “must ensure the loan is covered by either a title policy issued by an acceptable insurer (including any required endorsements) or a title opinion letter issued by an attorney,” according to Fannie Mae. This aligns Fannie Mae’s guidance with guidance Freddie Mac issued in May 2020. It is believed the "limited circumstances" would be for certain refinances.

“It is not unique for the Government-Sponsored Enterprises to align their guidance and provide consistency and standardization in the market,” said Diane Tomb, ALTA’s chief executive letter. “Title insurance remains the most robust and comprehensive product that provides an underwriting service giving mortgage lenders confidence that a borrower has clear ownership rights to the property when refinancing.”

ALTA continues to engage with the GSEs and lending partners on the vital role the title industry’s products and services play in a well-functioning housing finance market.

“As these guidelines take effect, it is important for all parties involved to consider the risks associated with accepting attorney opinions in lieu of a title insurance policy—even in limited circumstances,” Tomb said. “Historically, lenders have preferred the protection of a title insurance policy, and Fannie Mae itself has acknowledged that there may be additional risk in accepting attorney opinions.”

In following in the footsteps of Freddie Mac's guidance, Fannie Mae also requires lenders to use a special code to flag loans using an attorney title opinion letter.

The attorney issuing the title opinion letter must be licensed to practice law in the jurisdiction where the subject property is located and must be insured against malpractice in rendering opinions of title in an amount commonly prevailing in the jurisdiction.

The attorney title opinion letter must:

  • be addressed to the lender and all successors in interest of the lender
  • be commonly accepted in the area where the subject property is located
  • provide gap coverage for the duration between the loan closing and recordation of the mortgage
  • list all other liens and state they are subordinate
  • state the title condition of the property is acceptable and the mortgage constitutes a lien of the required priority on a fee simple estate in the property


Contact ALTA at 202-296-3671 or communications@alta.org.

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