A $75 Fee vs a Four-Figure Premium: The FHFA Pilot Tests Title Pricing

Fannie Mae charges a lender $75 to waive the requirement for a lender's title insurance policy on a qualifying refinance, and the policy it replaces can cost a borrower well into four figures. That gap is not a rounding error; it is the entire argument. Title insurance is the rare property and casualty line that pays only a few cents of each premium dollar back out in claims, with industry loss and loss-adjustment expense running near 5% of premium in 2024 against the 70 to 80 percent typical of other P&C lines. The Federal Housing Finance Agency's Title Acceptance Pilot, launched in March 2024 and expanded under new agency leadership in 2025, puts a $75 risk-acceptance fee where a four-figure premium used to sit, and in doing so forces a question title insurers have rarely had to answer in public: what is the price actually buying.

~5%

Title insurance loss and loss-adjustment expense as a share of premium in 2024.

$75

Per-transaction fee Fannie Mae charges lenders to accept title risk under the pilot.

$500-$1,500

Per-loan consumer savings FHFA and Fannie Mae attribute to the waiver.

An Insurance Line That Barely Pays Claims

Most property and casualty lines are priced around expected losses. The actuary projects claim frequency and severity, adds expense and profit loadings, and the loss pick is the dominant term. Title insurance inverts that structure. The industry took in roughly $16.2 billion of premium in 2024 and paid out on the order of $676 million in claims, a loss ratio near 5%, because the title product is built to prevent losses rather than to spread them. Before a policy issues, a title company searches the public record, examines the chain of ownership, and clears liens, judgments, and defects, and that curative work is where most of the cost and most of the value sit. The premium funds the search, the examination, the agent commission, and the overhead of maintaining title plants, not a large pool of expected claims.

That makes the loss ratio a misleading lens on its own, which is exactly the rhetorical opening the waiver pilot exploits. A 5% loss ratio looks, to an outsider, like a product that is wildly overpriced relative to the risk it absorbs. The industry's answer is that the low loss ratio is the product working as designed: claims are rare because the upfront search prevents them, and stripping out the search to point at the thin claims layer misunderstands what the premium pays for. Both framings are partly right, and the pricing tension between them is the substance of the pilot. If the search and exam are the value, a process that replaces them with an automated risk check is testing whether that value can be delivered for far less.

Reverse Competition and Why the Price Stays High

Title pricing has a structural feature that does not appear in auto or homeowners: the person who pays for the policy does not choose the insurer. In a typical transaction the buyer or borrower pays the premium, but the placement is steered by the realtor, the lender, or the settlement agent, none of whom bears the cost. Economists call this reverse competition, and its effect is that title insurers compete for the favor of the intermediaries who direct business, not for the price sensitivity of the consumer who pays. Competition flows into agent commissions and referral relationships rather than into lower premiums, which is part of why the price has stayed high even as the loss experience stayed benign.

Regulation responds to that distortion unevenly across states, which complicates any single national story about title pricing. Some states promulgate title rates, setting them directly so the insurer has no pricing discretion at all. Others use file-and-use or prior-approval regimes that leave more room for competition, and a few regulate the all-in closing cost rather than the premium alone. An actuary working in title therefore operates inside a patchwork where the rate may be a regulatory output rather than an actuarial indication, and where the usual feedback loop between price and consumer demand is muted by reverse competition. The FHFA pilot effectively bypasses that entire apparatus by removing the policy from the transaction rather than arguing about its price.

The Pilot That Did Not Go Away

The Title Acceptance Pilot waives the requirement for a lender's title insurance policy, or an attorney opinion letter, on certain low-risk refinances, specifically those with loan-to-value ratios under 80% and no prior liens or encumbrances, in selected geographies. In place of the policy, an automated process assesses title risk before the loan is delivered to Fannie Mae, and the lender pays Fannie a $75 fee to cover the residual risk the agency accepts. The program launched in March 2024 under then-Director Sandra Thompson, and rather than lapsing it was expanded under Director Bill Pulte in 2025, who added Westcor as a second title vendor alongside Doma in July 2025 to broaden participation and, in the agency's framing, foster competition and cut closing costs. Lenders including UWM and Better have taken part, with some adding their own settlement-agent fees in the few-hundred-dollar range.

FHFA and Fannie Mae put the consumer savings at $500 to $1,500 per loan, and third-party analysis has run higher, estimating up to roughly $1,692 per loan and aggregate savings around $2.19 billion. The American Land Title Association has opposed the pilot throughout, fourteen state attorneys general urged FHFA to terminate it in a July 2024 letter, and members of Congress have pressed the agency on it. None of that stopped the expansion. For a title actuary, the relevant fact is not the political fight but the survival: a federal mechanism that prices the title risk on a clean refinance at $75 is now an established, growing alternative to a four-figure policy, and it is not going away on its own.

The Skimming Problem in Actuarial Terms

The pilot is carefully scoped to the cleanest slice of the market: low loan-to-value refinances with no prior liens, the transactions least likely to surface a title defect. From the title insurer's side, that scoping is adverse selection in reverse, a skimming of the best risks out of the book. Title premium on a refinance already reflects a lower expected loss than a purchase, because the prior policy and the recent chain reduce the unknowns, so the pilot is removing precisely the business whose price most exceeds its risk. What remains on the title insurers' books skews toward purchases, higher loan-to-value loans, and properties with messier histories, where the loss exposure is genuinely higher.

That has a direct pricing consequence. If the cleanest refinances leave the pool, the average risk of the residual book rises, and a rate that was adequate across the whole population becomes inadequate for the population that is left unless it is re-rated upward. The line cannot simply keep its rates flat and lose only the low-risk volume; the loss ratio on the remaining book drifts higher, and the rate has to follow. The pilot, in other words, does not just take volume, it worsens the mix, and an actuary pricing title in 2026 has to ask whether the filed rates still match a book that is being selected against by a federal program targeting its best risks.

What a $75 Fee Implies About Price-to-Risk

The $75 fee is itself a pricing statement, and it is worth reading as one. Fannie Mae is not buying a title search when it accepts the risk; it is substituting its own data, its representations and warranties framework, and lien-priority checks for the policy, and pricing the residual risk it retains at $75 per clean refinance. That number embeds the GSE's own estimate of the probability and severity of a title defect surviving its automated screen on a low-loan-to-value refinance, and it is orders of magnitude below the premium. The gap does not prove the premium is pure rent, because the GSE is accepting only a narrow, pre-screened slice of risk and is backed by its own data and recourse, not by the full title-search apparatus a policy funds. But it does establish a public benchmark for what a sophisticated counterparty thinks the residual title risk on a clean refinance is worth, and that benchmark is uncomfortable for a line that has priced the same risk in the hundreds or thousands of dollars.

For the title actuary, the fee reframes the pricing conversation from the loss ratio to the marginal risk on the safest transactions. The defensible position is that the premium pays for the curative search that makes the loss rare, and that the GSE is free-riding on a clean public record that title work historically helped create and maintain. The vulnerable position is the refinance premium that sits far above both the expected loss and the GSE's accepted-risk price, because that is the slice where the value of a fresh search is hardest to demonstrate and easiest to automate away.

The Tail the Pilot Does Not Price

Title insurance is a single premium paid once at closing for coverage that runs for as long as the insured holds an interest in the property, which can be decades. That structure hides a long tail: a defect, a forged deed, an undisclosed heir, a missed lien, may not surface for years, and when it does the claim lands long after the premium was earned. The automated risk acceptance in the pilot is calibrated to the data available at origination, and a clean automated screen is not the same as a search that would have caught a defect outside the data. If a waived loan later develops a title problem, the loss falls on the GSE's acceptance framework and the borrower's situation rather than on a title policy, and whether that backstop performs like a policy across a full real-estate cycle is genuinely untested.

That tail is also where the title industry's pricing argument is strongest and least visible. The value of a policy is partly the indemnity and partly the defense and curative obligation that a title insurer takes on when a covered claim arises years later, and a $75 risk-acceptance fee does not obviously fund a decades-long defense obligation. An actuary modeling the run-off of waived loans, on either side, has to reckon with a low-frequency, long-latency exposure that neither the loss ratio nor the origination-time screen captures well, and that is the part of the pricing debate most likely to be settled only by a future down cycle in real estate.

What This Means for Title Pricing

The FHFA pilot is not an existential event for title insurance, but it is a permanent change in the line's pricing environment, and pretending it will lapse is no longer an option after the 2025 expansion. Title actuaries should price for a book that is being selected against, re-rating the residual as the cleanest refinances are skimmed into the GSE channel rather than holding filed rates that assumed the whole population. They should be ready to articulate, in pricing and rate-filing terms, what the premium funds beyond the thin claims layer, because the $75 fee has made the loss ratio a public talking point. And they should price the long-latency defense and curative obligation explicitly, since that is the part of the product the waiver most clearly does not replicate. The pilot put a number on the title industry's least defensible slice. The industry's pricing response will determine whether it keeps the rest.