Skip to main content

ALTA Pushes the Fed to Consider Title Insurance in Qualified Mortgage Standard

NationalMortgageProfessional.com
Jul 26, 2011

The American Land Title Association (ALTA) has urged the Federal Reserve Board (FRB) to require the inclusion of a title insurance policy as it evaluates the ability-to-repay and qualified mortgage (QM) standard. Title XIV of the Dodd-Frank Wall Street Reform and Consumer Protection Act amends the Truth-In-Lending Act (TILA) to establish minimum underwriting standards to implement the statute's requirement that creditors determine that the consumer has a reasonable ability to repay the loan according to its terms. “The ability-to-repay requirement is one of the pillars of Dodd-Frank’s effort to address the causes of the residential housing bubble,” said Anne Anastasi, president of the American Land Title Association (ALTA), in a letter to the Federal Reserve’s Board of Governors. “While this provision recognizes the value of examining the borrower’s financial history, the history of the legal title to the collateral also needs to be examined. Prudent underwriting of a borrower’s ability to repay would require that a creditor evaluate the title to the collateral to determine what outstanding debts will need to be satisfied before the creditor can obtain the first lien mortgage.” A title search and examination backed by a title insurance policy is a crucial underwriting feature that ensures that the borrower will have the ability to repay the mortgage by verifying their ownership of collateral and identifying any liens superior to the creditor’s mortgage. The title insurance process provides information that a credit report does not and can identify other debt obligations that could affect the borrower's debt-to-income ratio. “Not all debts are evidenced in a credit report,” Anastasi said. “Rather some debts are secured by placing a lien against the property that will only show up after a title search and examination. Unless satisfied at closing, these secured debts will become the obligation of the borrower when they take title to the collateral. Without this process, both the borrower and creditor will be at greater risk for having their title challenged and suffering a loss.”
Published
Jul 26, 2011
'A Long Road To Normal'

Nominated again to lead The Fed, Powell tells Senate committee to expect three rate hikes, but 'if we have to raise interest rates more over time, we will.'

Regulation and Compliance
Jan 11, 2022
CFPB: Complaint Response Worsens At Big 3 Credit Bureaus

Report claims Equifax, Experian, and TransUnion routinely failed to fully respond to consumers with errors.

Regulation and Compliance
Jan 10, 2022
The Fed Names Chairs, Deputy Chairs For 12 Reserve Banks

In recent years, the Federal Reserve System has worked to increase the overall diversity of the Reserve Bank and branch boards of directors and continues to build on those efforts.

Regulation and Compliance
Jan 06, 2022
The Fed: Rate Hike Likely Coming in June

Federal Open Market Committee's December minutes reveal discussion of first hike in federal funds rate in 2Q of 2022, as well as of ending asset purchases by March.

Regulation and Compliance
Jan 05, 2022
AARMR No Protection For Savanah Scares

Conference provides opportunity for regulators to interact, discuss common topics

Regulation and Compliance
Jan 04, 2022
McCargo Sworn In As Ginnie Mae President

Former HUD official becomes the first female to lead the Government National Mortgage Association.

Regulation and Compliance
Jan 04, 2022