Editor's Note: This column was co-authored by Karla Jones.
President Trump and new U.S. Federal Housing Director Bill Pulte made waves last week by overhauling the boards of Fannie Mae and Freddie Mac. As they continue to shake up the Federal Housing Financing Agency (FHFA), a leftover Biden Administration scheme presents a perfect opportunity to stop federal overreach and return power to the states.
During the Biden administration, the Federal Housing Finance Agency (FHFA) began a program that removes state-regulated, private-sector title insurers from the refinancing process in favor of the federal government. Originally introduced in 2022 under the false premise of reducing the costs of buying a home, the White House promptly dropped the measure in the face of bipartisan opposition on Capitol Hill. Undeterred, President Biden reintroduced the program in his final State of the Union address last March, and it still appears in the 2025-2027 Equitable Housing Finance Plan.
This effort presents a fundamental constitutional concern, as it seeks to undermine states’ authority to regulate insurance. When our Founding Fathers devised a governing system for the newly formed United States, determining where federal power ended and where state and local authority began was a signature accomplishment.
The Tenth Amendment, which provides that “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively or to the people,” was intended to prevent Washington, D.C., from interfering in matters best left to the states.
As a result, the regulation of insurance – including title insurance – has long been recognized as a state prerogative, protected by statutory frameworks like the McCarran-Ferguson Act. Passed in 1945, the Act explicitly grants states the primary role in overseeing the insurance industry, acknowledging that local officials are best positioned to understand and address the nuances of their respective markets.
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Fourteen state attorneys general reiterated that point in a joint letter to then-FHFA Director Sandra Thompson last July, writing, “Title insurance is a state-regulated industry, and homeowners will be better served if it stays that way.”
While lawmakers in Washington have contended that the program is risky, Americans should also be concerned with how the program subverts the state-based regulatory system and expands the role of the federal government. Recognition of the FHFA program’s potential to erode federalism is what prompted state legislators who are members of the American Legislative Exchange Council (ALEC) to approve the model Resolution Reaffirming Support for the U.S. State-Based System of Title Insurance Regulation in Response to Growing Federal Encroachment.
For decades, the federal government respected states’ authority on this issue. However, in announcing by fiat that it intends to eliminate title insurance on certain loans in favor of a federal government approach, President Biden’s FHFA upended that balance. The agency is treading onto state regulators’ territory and essentially turning the Government Sponsored Enterprise Fannie Mae, which cost American taxpayers $200 billion when it was bailed out of the 2008 financial crisis, into a federal title insurer.
Indeed, over the last several years, a perfect storm of inflation caused by excessive government spending, low inventory, and high interest rates has driven home prices through the roof and Americans out of the housing market. However, title insurance is not driving this affordability challenge, and removing private-sector insurers at the state level from the real estate market will only create additional costs and risks to homeowners, lenders, and the housing finance system.
The title insurance industry is already subject to strict oversight by the individual states. Rate regulation varies by state, but most stipulate that title insurance rates may not be excessive, inadequate, or unfairly discriminatory. State insurance regulators have worked to craft and enforce policies that safeguard consumers, maintain market stability, and ensure transparency in title transactions. These policies provide homeowners with assurances that the property is truly theirs.
As the Trump administration looks for opportunities to curtail the bureaucracy in Washington, D.C., they should address this federal encroachment into title insurance, a sector properly under the purview of the states, putting an end to another ill-informed, Biden-led, federally run program that will hurt consumers and taxpayers.
John Snyder represents the 82nd District in the Florida House of Representatives.
Karla Jones leads the Federalism, International Relations, and Homeland Security Task Force for the American Legislative Exchange Council.
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