Fannie Mae, Freddie Mac forced to buy title insurance—cost may hit borrowers
H.R. 3206 — Protecting America's Property Rights Act · Filed by Andrew Garbarino (R-NY) · 24 cosponsors · Introduced May 6, 2025 · Referred to committee
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What it does
This bill requires Fannie Mae and Freddie Mac (the 'Enterprises') to use title insurance or similar lien/title-protection products that are regulated by state insurance or financial regulators when they purchase mortgages. Mortgages that don't meet this requirement trigger an additional 1% capital reserve. The bill aims to shift risk of title defects from the Enterprises (and ultimately taxpayers) to regulated third-party insurers.
Why we flagged it
The bill's core mechanism is a regulatory mandate requiring Fannie Mae and Freddie Mac to use state-regulated title-protection products, backed by a capital-reserve penalty for non-compliance. This is a risk-transfer and prudential-management measure, not a subsidy or deregulation.
What the text implies
- The 1% capital requirement may reduce the Enterprises' mortgage-purchase capacity, potentially tightening credit availability in the secondary mortgage market if not offset by regulatory relief elsewhere.
- Title insurers and lenders may capture the risk premium created by the capital requirement, with no guarantee that cost savings flow to borrowers rather than to intermediaries.
The full analysis lists 4 implications of this text.
Who stands to gain
title insurance companies; mortgage lenders (via risk transfer and potential cost pass-through); state insurance regulators (expanded oversight jurisdiction)