ALTA Informs FHFA About Risk of Using Attorney Opinion Letter Alternatives

October 18, 2022

ALTA sent a letter on to Federal Housing Finance Agency (FHFA) Director Sandra Thompson outlining concerns about the gaps and inadequacies with title insurance alternatives currently under consideration as part of the Equitable Housing Finance Plans, especially as they relate to consumer protection risks.

In the letter, ALTA explained that alternative products—including certain attorney opinion letters—provide less protection to homebuyers compared to a standard title policy. As an example, one core protection of title insurance is that it protects against fraud or forgery related to the property rights purchased by the buyer. This is one of the largest sources of claims paid in the industry. This is not covered by alternative products.

ALTA believes considering attorney opinion letter alternatives in lieu of title insurance counters the FHFA’s mission and would provide inadequate protection to lower-income and first-time homebuyers.

“We do not believe these products will provide any costs savings and, based on the marketing we have seen, might actually cost more than traditional title insurance,” said Diane Tomb, ALTA’s chief executive officer. “However, even if it should generate some cost savings at closing, consumers will pay more in the long run by taking on additional risk and losing the legal defense obligation of the title company in a title dispute. This tradeoff would be catastrophic for those forced into this arrangement.”

Contact ALTA at 202-296-3671 or