Key facts
- The order directs Fannie Mae and Freddie Mac to pilot mortgage insurance cancellation using automated valuation models.
- The pilot program is limited to mortgages made after its establishment, excluding most existing borrowers.
- The order expands a pilot for alternatives to lender's title policies, potentially allowing their use on loans above 80% LTV.
- The order calls for waiving appraisals and reducing fees on certain limited cash-out refinances.
President Donald Trump signed an executive order on Thursday aimed at reducing housing costs, focusing on mortgage insurance cancellation and alternatives to title insurance. The order directs Fannie Mae and Freddie Mac to pilot programs that could potentially save borrowers money, though industry analysts and participants noted the final text is narrower than an earlier draft.
Keefe, Bruyette & Woods analysts viewed the order as "fairly benign" for mortgage and title insurers, while U.S. Mortgage Insurers president Seth Appleton supported aligning GSE policies to allow proactive contact with mortgagors for mortgage insurance cancellation. The order's pilot for mortgage insurance cancellation is limited to new mortgages, a significant reduction from a draft that would have applied it more broadly.
The directive also seeks to expand a pilot for alternatives to traditional lender's title policies, potentially allowing their use on loans above 80% LTV and removing geographic limits. Fannie Mae and Freddie Mac have already implemented programs saving borrowers an estimated $500 to $1,500 per loan on title insurance.
Additionally, the order calls for waiving appraisals and reducing fees on certain limited cash-out refinances. However, some market participants, like Marty Green, noted that applying these cost reductions only to refinances limits their benefit in the current rate environment.