Assessing FHFA’s Pilot Program on Automated Title Decisioning: Promoting Competition and Reducing Housing Prices

Housing affordability remains a critical economic, political, and social issue in the United States. High closing costs, including title insurance, significantly contributes to the problem. The title insurance industry is characterized by limited competition, high consumer search costs, and market structures favoring a few large incumbents. To address these challenges, in 2024 the Federal Housing Finance Agency (FHFA) introduced a pilot program that permits use of automated title insurance underwriting systems to replace traditional title insurance for low-risk refinance transactions.

 

This study evaluates the economic and consumer benefits of the Title Acceptance Program, focusing on cost savings, enhanced competition, and improved market efficiency. The findings indicate that the program can generate substantial consumer benefits, with estimated annual savings of $96 million and projected lifetime savings between $1.38 billion and $2.19 billion. These savings derive from direct cost reductions, competitive pressure on incumbent pricing, and increased consumer adoption of lower-cost alternatives. Preliminary evidence suggests that automated underwriting maintains loss rates comparable to traditional methods, ensuring financial risk remains low. The program also provides particular benefits to underserved populations, including low-income, rural, and minority consumers. By fostering innovation, enhancing transparency, and reducing costs, the Title Acceptance Program represents a significant step toward addressing housing affordability and advancing competition in the title insurance industry.