FinCEN GTO Expands, FNMA Pilot Returns

Two Industry Topics:

• FinCEN proposed a rule requiring nationwide reporting of residential cash transactions.
• FNMA pilot project to waive any type of title assurance on certain refinances.

FinCEN. Many of you are familiar with the Geographic Targeting Orders that require the reporting of information around residential cash transactions. These began in 2016 and have since been extended and expanded to now cover 11 counties in Florida. FinCEN believes the data it has received on those reports (Florida and elsewhere) is valuable and is therefore expanding the reporting requirement nationwide. There is no minimum dollar threshold for a transaction to be reported and the rule covers vacant and improved property. Only those transactions in which the buyer is an entity are covered but the new rule will cover trusts, too. There is a lot…..and I mean a lot…..to unpack in this rule so you must stay up to speed on how the finalization of the rule is progressing. Currently, FinCEN is collecting comments from interested parties through April 16. They will then consider all of the comments and come out with a final rule. This will take months and we are not likely to see a final rule until the end of 2024 or early 2025. However, getting up to speed on how you are going to incorporate the reporting requirement into your workflow will not happen overnight so please pay attention when we send out updates and information on this rule. I will talk about this at Fund Assembly and have already spoken to several groups of Members about the details. More to come in upcoming blogs.

FNMA Title Waiver Pilot. No, this is not a typo. You may recall that about a year ago, this was a “thing” that FNMA was considering but through the efforts primarily of ALTA, the proposed pilot was discontinued. This was a massive educational and awareness effort that included members of Congress and various industry organizations. Then, to the surprise of many, President Biden announced a new pilot in the State of the Union address last week. The new pilot is somewhat similar but is limited to refinances.  We are learning more about this proposed pilot but here are the key points of which we are aware today:

• It only applies to refinances with “low risk,” which has not been clearly defined.
• An “automated title review process” will be done and if it “confidently assesses that the title risk is low,” there is no requirement for a title insurance policy or AOL. HOWEVER, the initiating lender must pay FNMA a “fee” to cover the risk of an unexpected title defect. It is not clear how lenders will handle this fee:  pass it along to the borrower, raise their origination fee/points?
• This results in the GSEs being in the insurance business. Insurance is a STATE regulated product/process and one that the GSEs are arguably not authorized to conduct.
• Here are some talking points put together by ALTA that will provide more information. https://www.thefund.com/information-center/pdf/alta/alta-talking-points-on-title-waiver-pilot.pdf

Our industry and your role in it continue to be threatened by misguided policies such as this one. We continue to suffer the consequences of misunderstandings about what we do and the strength of the title insurance product. We share the responsibility for this. ALTA is again in high gear to address this situation. How can you help? Please join ALTA's Title Action Network. It is free and you do NOT have to be a member of ALTA to join. TAN will send you an email with a link for you to send a message to your representatives in Congress; you can use the pre-prepared message or tweak it to suit your preferences. Based on the information you provide when you sign up, it will identify your representatives and direct your response to them. THIS IS IMPORTANT. IT'S EASY AND FREE. Here is the link to join TAN.  https://www.alta.org/advocacy/tan I would love for ALTA to tell me that Fund Members responded to this call to action.

Assembly 2024. On a much happier note………we all deserve more credit, don’t we? ! Here’s your chance. Attend Fund Assembly In-Person or Live Online to earn up to 15.5 CLE credits from The Florida Bar. I encourage you to experience Fund Assembly’s legendary legal education – it’s a great way to Stay Informed; Remain Competitive. Here’s the link to register: https://www.thefund.com/assembly.aspx 
Please join your fellow Fund Members in Orlando!

That's all for this week. Let me know how we can help you.

Melissa Jay Murphy
Executive Vice President, Chief Legal Officer,
and General Counsel