Small businesses power the title insurance industry


May marks National Small Business Month in the U.S., an opportunity to recognize and promote the work of small businesses and their contributions to the economy. While often overlooked, small businesses are the economic backbone of this country, creating jobs and generating revenue across the U.S. Nearly half of U.S. employees are employed by small businesses, and 99.9 percent of all businesses nationwide qualify as small businesses. 

As an industry made up of small businesses, the title industry not only offers insurance to protect most Americans’ largest investment – their homes – but its local businesses also generate economic growth and give back to their communities. While the Biden Administration has claimed it is “fighting to grow the small business boom,” I would encourage the Administration to keep small title insurance businesses, which make up 90% of the title industry, in mind. 

Title insurance provides protection and peace of mind for homeowners and lenders – both before and after Closing Day. Issues such as tax liens, forged signatures, recording errors, or other risks such as fraud, have the potential to interfere with the transfer of ownership of a property. Title professionals work to resolve problems prior to the purchase. The goal is to prevent any claims. If an issue happens to pop up after closing, for a one-time fee title insurance provides protection for as long as the homeowner owns the property.   

With only 70% of public records at the county level digitized, title insurance professionals spend significant time fixing title issues. In fact, a recent study found that title professionals spend approximately 22 hours to close a standard transaction and 45 hours for more difficult transactions, which make up 36% of all transactions. 

But beyond the benefits it provides, the title industry also supports small businesses, jobs, and the U.S. economy as a whole. A recent report by Ernst & Young’s Quantitative Economics and Statistics (QUEST) measured both the direct and broader U.S. economic impact of the title industry. According to the report, the title insurance and settlement services industry directly generated $30 billion in GDP in the U.S. economy and 155,000 jobs in 2022, illustrating the industry’s impact on local communities. Annually, title agencies also collect $3 billion in delinquent federal income taxes, property taxes, and unpaid child support.

Recently, title insurance professionals have had the fate of their small businesses threatened by the Biden Administration’s new pilot program, which would waive the requirement for lender’s title insurance on certain refinancing transactions. Essentially, the program would turn Fannie Mae and Freddie Mac into federal title insurance companies, replacing the work of mom-and-pop title insurance businesses across the country.

Members of Congress on both sides of the aisle and industry groups have criticized the Biden Administration and the Federal Housing Finance Agency (FHFA) for its misguided messaging of lowering closing costs for Americans. In a recent letter to President Biden signed by 18 members of Congress, the members wrote, “While well-intentioned, this pilot program will not address the true issue of housing affordability in our communities and puts homebuyers at risk.”

During National Small Business Month – and every month – we all should find ways to support small businesses in our communities and advocate for policies that lift them up, not tear them down. 

In the face of economic instability over the past few years, the title industry has continued to generate jobs and economic growth across the country while also protecting the property rights of Americans. The federal government should protect this vital industry of small businesses.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

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