Protecting America's Property Rights Act
- Sponsor
- Rep. Garbarino, Andrew R. [R-NY-2]
- Committees
- Financial Services Committee (primary)
- Last action
- May 6, 2025
Bottom line
This bill mandates the use of state-regulated title protection products by Fannie Mae and Freddie Mac and imposes a capital penalty for non-compliance, aiming to strengthen mortgage market stability and consumer protection.
What it actually does
This bill mandates that Fannie Mae and Freddie Mac (referred to as 'the Enterprises') utilize state-regulated third-party products for managing risks related to title defects and lien enforceability on conventional mortgages they purchase. It also imposes an additional 1.00% capital charge on the unpaid principal balance of any mortgage that does not meet these new requirements, aiming to strengthen financial stability.
Proponents argue
Proponents argue this bill enhances the safety and soundness of the mortgage market by ensuring that title and lien risks are managed through robust, state-regulated products. This approach protects homeowners and the Enterprises from potential losses due to title defects, thereby stabilizing the housing finance system and reducing taxpayer exposure. It also supports the existing state-based regulatory framework for title insurance.
Opponents contend
Opponents might argue that mandating specific third-party products could increase costs for the Enterprises, which may then be passed on to consumers through higher mortgage rates or fees. They might also contend that the 1% capital charge is an arbitrary penalty that could restrict mortgage availability or make certain loans less attractive for purchase by the Enterprises, potentially hindering market liquidity.
The bill is very short and straightforward, allowing for quick comprehension of its core provisions.
Section 2(a), amending 12 U.S.C. 4513b(a)
Requirement for State-Regulated Title and Lien Risk Management
This provision requires Fannie Mae and Freddie Mac (referred to as 'the Enterprises') to manage risks associated with defects in property titles or the enforceability of liens. They must do this by using third-party products that are regulated by either a 'State insurance authority' or a 'State regulator,' as defined in existing federal law. This ensures that the products used for title protection are subject to state oversight.
Supporters argue
Supporters argue this provision strengthens consumer protection and financial stability by ensuring that critical title and lien risk management products are subject to robust state-level regulatory oversight, preventing potential losses from title defects.
Critics contend
Critics might argue that this provision could limit the types of risk management products the Enterprises can use, potentially stifling innovation or increasing costs if non-state-regulated alternatives are more efficient.
Tradeoffs
The provision balances the desire for robust risk management and consumer protection with potential impacts on market flexibility and cost.
Section 2(b)
Capital Surcharge for Mortgages Lacking State-Regulated Title Protection
This subsection directs the Director of the Federal Housing Finance Agency (FHFA) to require Fannie Mae and Freddie Mac to hold an additional 1.00 percent of the unpaid principal balance for any mortgage they purchase that does not comply with the requirement to use state-regulated third-party title protection products. This acts as a financial incentive for the Enterprises to adhere to the new risk management standards.