Skipping title insurance in a mortgage refinance isn't worth the risk

• Key insight: An FHFA program that allows some homeowners to finance without mortgage insurance is the first step down the slippery slope to a more volatile mortgage market.
• Supporting data: In 2025 alone, roughly 8.8 million non-mortgage liens and related filings were recorded in the public land records, including some 2.42 million court judgments.

• Forward look: Someone has to find those problems and clear them before a clean transfer of ownership or establishment of lien position can happen. That curative work is done, and paid for, by the title insurance industry.

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As a real estate economist, I closely study the data and metrics that dominate housing headlines and move the housing market month to month, including mortgage rates, home prices, incomes, house-buying power and more. But underneath all the market-moving data sits a foundation that is almost never visible: the confidence that when someone buys a home, they actually own it, and can later sell it or borrow against it without a stranger's decades-old claim surfacing to unwind the deal.

That confidence is not free. It is not automatic. And proposed policy changes in Washington could put it at risk.

The U.S. owner-occupied housing market is worth roughly $55 trillion, accounting for about 16% of GDP and representing most families' largest source of wealth. Every dollar of that value depends on a simple belief being reliably true: that a buyer knows the seller owns the property in question.

Proving property ownership is harder than most people assume, because the public land records are not held in one definitive and publicly accessible national database. They are distributed across a patchwork of more than 3,600 local jurisdictions, unstandardized, governed by different state laws and, when in dispute, settled in court.

Economists would call these land records a "public good" since anyone can use them, and one person's use doesn't diminish another's ability to use them.

Yet, not all is good with these records. Public land records are riddled with the kinds of documents that can quietly cloud ownership and lien position: unpaid liens, court judgments, easements, errors in legal descriptions, forged signatures, or heirs no one knew existed. In 2025 alone, roughly 8.8 million non-mortgage liens and related filings were recorded in the public land records, including some 2.42 million court judgments.

Someone has to find those problems and clear them before a clean transfer of ownership or establishment of lien position can happen. That curative work is done, and paid for, by the title insurance industry.

That's why the Federal Housing Finance Agency's expansion of a pilot program that allows some homeowners to refinance without a title insurance policy deserves closer scrutiny. The pilot is part of a broader push to lower closing costs, a worthy goal, but one that should account for how title risk is identified, resolved and, ultimately, borne.

While the goal of reducing the costs of homeownership is a worthy one, the pilot rests on a way of thinking about title insurance that misunderstands its value. It treats the premium as a fee to be trimmed. But the premium is the price of what the entire housing market quietly runs on: the certainty that ownership is enforceable and transferable, can reliably secure a loan. It also signals that the premium comes with a clearly accountable party, the title insurance industry, which is responsible for investigating claims, retaining counsel, defending the insured interest, resolving disputes, curing title defects, or paying covered losses. Refinancing without a title insurance policy doesn't waive that certainty, but instead creates uncertainty.

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If a policy allows a growing share of transactions to lean on the public land record's accuracy without ensuring that the certainty of the public record is maintained, the incentive of those who do that work erodes. That is the classic setup for a tragedy of the commons: The shared resource degrades through the accumulation of everyone rationally declining to curate the public good.

The pilot's defenders argue these are low-risk loans. After all, refinances only occur when the borrower already owns the home. But "already owns it" is not the same as "clean title." Roughly half of refinance transactions turn up at least one curative requirement beyond simply paying off the existing mortgage.

In fact, title risk exposure on refinances alone approached $480 billion in 2020. Liens, easements, vesting problems, and outright fraud do not check whether a borrower "already owns it" before they attach to the property, and even the best attempt to search for these and similar matters affecting "clean title" do not guarantee that they don't exist. Public land records may be incomplete, delayed, mis-indexed, fraudulent, or legally ambiguous. One thing is certain: Waiving title insurance means waiving the certainty and protection it provides.

Waiving coverage doesn't eliminate the risk exposure; it relocates it. In this case to lenders, investors, servicers and, ultimately, homeowners, who become responsible for defending their ownership interests and lien priority in court, negotiating a resolution, correcting the public record themselves, paying a plaintiff damages, or even losing their home altogether.

What does the certainty that underpins a $55 trillion housing market cost? Title premiums are two to three cents per dollar of risk cured or insured. Furthermore, adjusted for home-price growth, the average title insurance premium is meaningfully lower today than it was a decade ago. Is the removal of all that certainty that supports such a critical part of the U.S. economy, mortgage market liquidity and the flow of capital into the U.S. housing market worth it?

Housing affordability is a genuine problem, one that is rooted in questions around housing supply, mortgage rates, and personal incomes.

Removing the certainty that keeps property records reliable and the U.S. housing market functioning efficiently, yet offers little relief to those most struggling with housing affordability, quietly erodes something the market can't easily rebuild once it frays. 

The policy question isn't simply whether a line can be cut from a closing disclosure. It's whether the immediate savings justify transferring risk away from a system designed to make a $55 trillion housing market liquid, transferable and financeable.