Affordability shouldn’t come at the expense of property rights

Proposals to waive title insurance on certain “low‑risk” mortgages are being promoted as a way to make homeownership more affordable, but the move would shift an estimated $600 billion in annual risk exposure onto homeowners and taxpayers. The title industry’s role—searching, analyzing and curing defects in the nation’s more than 3,500 county recorder offices—underpins every mortgage, sale and refinance, yet it is not guaranteed by any government agency. Eliminating that curative work would leave the system vulnerable to ownership disputes, fraud, forgery and off‑record liens, exposing the economy to potential losses that could exceed $1 trillion in peak years.

The column argues that judging title insurance by its low claims ratio is a misreading of its economics; unlike auto insurance, title insurance is a preventive product that averts infrequent but severe losses rooted in historical property issues. Waiving the requirement would primarily benefit higher‑income borrowers—those refinancing, with high credit scores or low loan‑to‑value ratios—while first‑time buyers, who are less likely to qualify, would see no cost relief. This selective reduction would thin the risk pool, driving up costs for the broader market, a pattern observed in other insurance sectors. Even “zero‑risk” refinances carry real exposures, and isolating them still leaves a potential $100 billion to $500 billion in risk depending on transaction volume.

While title premiums represent only about 42 basis points of a home’s value—far smaller than property taxes, mortgage interest, commissions and origination fees—their role in preserving the reliability of U.S. land records is critical. Recent industry advances, such as digitized records, automated searches, fraud detection and AI‑driven settlement, have already reduced average title premiums by roughly 32 % since 2016, demonstrating that competition and innovation can lower costs without sacrificing protection. The author urges policymakers to continue improving efficiency rather than eliminating title insurance, warning that doing so would trade the guarantee of “free and clear” ownership for savings that mainly benefit those best able to absorb any resulting loss.

⚡ Effects Interpreter