Opinion: How the title industry protects homeowners

ALTA CEO Diane Tomb outlines how title professionals are working to strengthen communities

When people think about the title insurance industry, what comes to mind is often its core products – title insurance policies that protect property rights of homeowners and lenders. But many may be surprised to learn that title and settlement professionals do so much more than conduct title searches, issue policies and process claims.

As an industry, our commitment to protection goes beyond title insurance policies. Behind the scenes, title and settlement professionals collaborate with partners across the real estate industry and all levels of government to protect consumers and strengthen communities.

We are proud of our strong track record of advocating for policies and programs that remove barriers to homeownership.

Expanding acess to digital closings

At the beginning of the pandemic, as our industry was deemed essential, we saw a need to increase access to digital home closings. The title industry led the way in collaborating with industry partners to expand access to digital closings through remote online notarization (RON), which has helped tens of thousands of homebuyers complete their real estate and mortgage transactions safely and securely through the innovative use of technology solutions.

Now, three years later, over 40 states have passed laws permitting RON, helping many, including those in underserved and underbanked communities, homebuyers with disabilities, and active-duty members of the military, complete important financial transactions.

Preventing wire fraud and helping wire fraud victims

Every year, unsuspecting homebuyers fall victim to a scam called real estate wire fraud, where fraudsters trick them into wiring their downpayments and closing costs to a fraudulent account. Title and settlement professionals have been working tirelessly to combat wire fraud, working with government agencies and industry groups to educate consumers and real estate professionals on the dangers of these scams, how to prevent them, and what to do if you or someone you know becomes a victim.

Recently, the FBI released a report that summarizes its efforts to combat business email compromise (BEC) scams and real estate wire fraud by working with partners to identify perpetrators and dismantle their organizations.

The report was spurred by ALTA’s efforts the past two years to get language included in various House and Senate appropriations reports directing respective agencies to report on efforts to combat and raise awareness of BEC and wire fraud and collaborate with industry partners to address threats.

Fighting against unfair fee agreements

Recently, there has been an increase in the filing of unfair real estate fee agreements in property records, so-called Non-Title Recorded Agreements for Personal Services (NTRAPS). These NTRAPS create impediments and increase the costs and complexity of financing or transferring real estate.

Elderly homeowners are particularly at risk, as they may have trouble understanding the long-term financial implications of these agreements.

As an industry, we united against these unfair fee agreements. A subgroup of ALTA’s State Legislative/Regulatory Action Committee worked with national stakeholders to draft a model state bill both prohibiting the recording of unfair service agreements and making existing agreements unenforceable. The bill is being considered in several states nationwide.

Providing affordable housing opportunities to those In need

ALTA launched the ALTA Good Deeds Foundation in 2020 with the goal of strengthening the communities where title professionals work. Since then, the foundation has given away more than $568,000 in grants to 97 community nonprofits in 36 states plus Washington D.C., with the majority of the grants directed to organizations that provide affordable housing opportunities, particularly for low- and moderate-income, minority households.

When natural disasters or humanitarian crises strike, the foundation also gives out emergency grants to those in need of food and shelter.

Identifying solutions to address discriminatory covenants

The existence of discriminatory racial and ethnic covenants in title deeds and other official property documents has caused significant harm to countless Americans. The title industry is a thoughtful partner in addressing discriminatory covenants and working to end housing discrimination.

At the federal level, ALTA has endorsed Sen. Tina Smith’s Mapping Housing Discrimination Act, which would help fund research regarding discriminatory covenants in land records.

ALTA has also convened a working group that examines key state legislative approaches to addressing the existence of discriminatory covenants — which previously prohibited the sale or lease of property based on race, ethnicity, or religion.

Addressing heirs’ property – a major hurdle to building wealth

Far too much land is often passed from one generation to the next without a will, resulting in land loss and preventing heirs from reaping the benefits that homeownership provides. ALTA has endorsed the Uniform Partition of Heirs Property Act (UPHPA), which has been enacted in 22 states and will be introduced in more states during the 2023 legislative session. The bill establishes remedies to help those who own heirs’ property maintain ownership.

ALTA has also brought together industry and outside experts to discuss the various ways industry and government can address the issue of heirs’ property, including how to quantify heirs’ property, how to better leverage estate planning tools and resources, and how to expand access to programs and services for those with heirs’ property.

Our work Is not finished

Beyond title insurance, the title insurance industry is committed to protecting homeowners and making one of life’s greatest wealth-building opportunities and investments — the purchase of a home — a reality for more households in America.

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