Trump Order Seeks Lower Mortgage Insurance and Title Insurance Expenses

President Donald Trump issued an executive order, titled Decreasing Housing Costs for the American People, directing a series of federal actions intended to reduce the cost of homeownership and residential mortgages. Two provisions are especially important for the residential real estate industry: proactive cancellation of mortgage insurance and expanded alternatives to lender’s title insurance for certain refinance transactions.

Section 2: Proactive Mortgage Insurance Cancellation

The order directs FHFA Director William J. Pulte, subject to specified findings, to create a pilot program under which Fannie Mae and Freddie Mac would periodically review covered mortgages to identify borrowers who appear to meet the requirements for mortgage insurance cancellation.

The pilot would apply only to mortgages originated after the program begins. To determine eligibility, the GSEs would rely on automated valuation models and other available data to evaluate current property values. Borrowers typically must request mortgage insurance cancellation after reaching at least 20% equity in their homes, but the order would introduce periodic reviews without requiring borrowers to take the first step. Any cancellation would still depend on applicable equity thresholds based on current market value, consistency with financial safety and soundness, contractual obligations, and other requirements.

The order also directs the GSEs to establish appropriate payment-history and financial safety and soundness standards and, where allowed by law and operationally feasible, to notify borrowers when mortgage insurance may be canceled while reducing unnecessary documentation, appraisal expenses, and other administrative barriers.

Section 4: Expansion of Alternatives to Lender’s Title Insurance

The order further directs FHFA, subject to specified findings, to expand the existing title acceptance pilot into a continuing nationwide program run through Fannie Mae and Freddie Mac. Under the contemplated program, a GSE could accept an automated title review or another FHFA-approved title-risk assessment instead of a lender’s title insurance policy for eligible refinance transactions.

Among other changes, FHFA is directed to consider widening eligibility beyond the current 80% loan-to-value limit for refinance transactions where title risk remains low, removing geographic restrictions, and certifying additional title-assessment providers. The order also directs FHFA to consider reducing other costs tied to certain limited cash-out refinances and states that any resulting savings should be passed through to borrowers.

Implications for Market Participants

The order does not set every detail of either initiative, and the eventual market impact will depend on how FHFA and the GSEs carry out the directives.

Mortgage insurers may need to assess whether proactive cancellation based in part on updated property values changes the expected life of mortgage insurance coverage on loans included in the program, as well as the operational effects of whatever standards FHFA ultimately adopts.

Title insurers and title agents may see less demand for traditional lender’s title policies in refinance transactions that qualify for alternative title products. At the same time, the initiative could create product-development opportunities for insurers able to offer streamlined or limited-coverage products that fit the changing GSE framework. Depending on product design and state law, such products could raise state regulatory issues involving forms, rates, underwriting, and permissible title-insurance activities.

Lenders and servicers may need to revise their processes to handle proactive mortgage insurance cancellation and determine when GSE-approved alternatives to traditional lender’s title insurance are available for eligible refinance transactions.

What Happens Next

The order sets the administration’s policy direction, but the practical significance of the initiatives will depend on further action by FHFA, Fannie Mae, and Freddie Mac. Market participants should watch for developments involving eligibility standards for the mortgage insurance pilot, automated valuation models and other valuation criteria, expansion of eligible refinance transactions, and the rules governing approved title-risk assessments and providers.