President Joe Biden has presided over a period of high inflation and, accordingly, a rapid rise in interest rates.
Some past presidents — like Lyndon Johnson and Richard Nixon — bullied the Federal Reserve into keeping interest rates low during election years, but Biden has promised to “respect the Fed’s independence.”
That was, until he was behind in the polls to former President Donald Trump.
During the State of the Union, Biden announced a pilot program for interest relief… and he caught everyone by surprise.
“If inflation keeps coming down, mortgage rates will come down as well. But I’m not waiting,” Biden said during the speech.
“My Administration is also eliminating title insurance fees for federally backed mortgages. When you refinance your home this can save you $1,000 or more.”
Biden reportedly failed to inform the American Land Title Association, representing about 6,000 title agents, settlement agents, and insurance companies.
Industry experts pointed out that consumers pay interest every month but pay title insurance only once.
“Title insurance premiums are paid only ONCE,” Joe Powell, an insurance lawyer, reportedly tweeted. “Title insurance premiums cover the underwriting and the risk assessment BEFORE the purchase or loan to confirm there won’t be any claims.”
In other words, the industry doubts the proposal’s effect on interest relief.
Some consumer groups consider these insurance premiums to be just another junk fee. “Reforming the title insurance industry is an essential component of addressing homebuying and homeownership affordability,” Birny Birnbaum, executive director of the Center for Economic Justice, told The Washington Times Monday.
However, the industry has emphasized the need for insurance.
Consumers buy title insurance to guard against the possibility of unpaid taxes on a property before purchasing it. They can receive payback by making a claim to their title insurers after purchasing.
What’s more, Biden stands accused of “playing politics,” if not necessarily bullying the Fed like Lyndon Johnson.
“Our biggest concern is playing politics with most Americans’ largest assets,” American Land Title Association CEO Diane Tomb told reporters, according to the Washington Times. “And if they are going to do it on this, what else are they going to do it on?”
As of Tuesday, the average lender charges 6.92% interest on a 30-year, fixed-rate mortgage. Meanwhile, the Fed has set its interest rate to about 5.4%, the highest rate in 23 years.
The Horn editorial team