Last year, I wrote about the title insurance industry’s rent seeking racket, but to my surprise, buried within President Biden’s State of the Union address was a call for reform: Fannie Mae would waive the title insurance requirement for refinanced mortgages. This is an important and obvious step to take.

For New Yorkers, and especially Long Islanders, this could be meaningful.

If you’re refinancing a mortgage, for most borrowers, the reform could lop $2,000 or more off your closing costs.

But the crime isn’t just the additional up-front cost. Most people simply roll their closing costs into the new mortgage, and the compounding effect, depending on how long you remain in your home, comes to quite a sum.

Multiply this by all the refinancings that have taken place in this state, and you have a transfer of billions of dollars over time from New York homeowners to title companies and lenders.

For no good reason.

As I mentioned in the last piece that dealt with this issue, the “cloud on title” issue is usually generated by the title companies themselves.

I recently sold my home, and what do you know, even after three refinances over the course of 30 years ownership, there was still an issue that wasn’t corrected by the past three title companies.

These people are charging a fortune to insure a miniscule risk, and their work is sloppy and haphazard to boot. It’s a good thing I saved the paperwork, from a bank that ceased to exist in 2007. Imagine the fun of tracking that one down.

Naturally, the industry is incensed!

As the Wall Street Journal reported, “The American Land Title Association condemned the plan as “a purely political gesture offering a false promise of savings for homeowners.” The industry body warned of increased financial risk for consumers, lenders, and taxpayers.

Title insurance serves to declare legal ownership of a property and offers protection against potential ownership disputes. However, some critics argue that it is excessively costly in an age of digitized land and title records, the Journal reported.”

Indeed.

There’s no increased financial risk. The thing has been a farce for decades. But as the old saying goes, “It is very difficult to get someone to understand something, when their salary depends on them not understanding it.”

Over the course of his Presidency, Mr. Biden has worked in many ways to reduce burdens for consumers. They almost never make the Nightly News, and barely get a mention anywhere. But they’re meaningful steps, and this is what you want a President to do.

Hopefully, the industry’s lobbyists will be neutered.

Donald Davret

Morristown