(NewsNation) — Fannie Mae, a government-controlled mortgage company, proposed a new plan that could help homeowners save hundreds on closing a mortgage.
The company announced last month that it is looking at expanding the types of mortgages it purchases, allowing lower-cost options to expensive title insurance, according to the New York Post.
So, what does this mean for homebuyers?
Americans would have the option to select Fannie Mae’s attorney opinion letter (AOL). This option allows a real-estate attorney to argue that nothing is wrong with the property’s title, the Wall Street Journal reported. Therefore, with the AOL, the homeowner can forego the title insurance.
The homeowners won’t have to spend money on that insurance, which helps them save upward of $1,000, Fannie Mae said.
Fannie Mae updated its Selling Guide back in 2022 to allow lenders this option as a way to reduce closing costs.
“For purchase transactions, average borrower savings have been more than $500, even when the borrower chose to obtain an owner’s title insurance policy,” the company said.
While AOLs are an option, they aren’t popular outside of Midwest states, the Wall Street Journal reported. It wasn’t until December 2023 that the company started accepting the opinion letters on a “majority of single-family loans,” the report said.
This decision comes months after Fannie Mae was instructed by the Biden administration to find ways to make housing affordable.