Presented by
Mark Fleming, SVP and Chief Economist
Don Kennedy, Division Managing Director
Len Prescott, Senior Division Counsel
Table of contents
As part of First American’s commitment to keeping agents informed, we hosted a national webinar in January 2025, spotlighting a recap of 2024’s most pressing risks, trends, and economic forces shaping the title industry. Here’s a concise recap of the key insights.
Fraud continues to dominate as the number one source of title claims in 2024, particularly with unoccupied and unencumbered residential properties. Criminal organizations are growing increasingly sophisticated, using everything from fake IDs to deepfake videos during remote online notarizations (RON). New schemes include fake power of attorney (POA) documents and even real attorneys being unwittingly drawn into validating fraudulent deals.
What the numbers reveal:
- 21% of claims dollars in 2024 were tied to fraud and forgery.
- $143,000 average loss per incident.
To mitigate risk, First American now requires agents to control the signing and notarization process for all sales and cash-out refinance transactions involving vacant residential land. Additional resources, such as the SAFEvalidation® service for secure wiring are provided at no extra cost to agents.
Wire fraud remains a constant threat, but there is good news: In 2023, the FBI’s “kill chain” intervention helped recover more than $538 million, with a 71% success rate. Even better outcomes are expected for 2024.
Commercial Real Estate: Pressure and Innovation
Despite widespread predictions of economic turmoil, commercial real estate (CRE) in 2024 fared better than expected. Demand rebounded in the retail sector, industrial spaces surged in popularity, and multifamily losses remained smaller than feared. However, warning signs loom:
- Delinquent CRE loans surged 25%, totaling $26 billion.
- $1.26 trillion in CRE mortgages are set to mature by 2027.
- Interest rate gaps and shrinking operating income are pushing more deals into default territory.
As traditional banks pull back, more deals involve complex capital stacks, including mezzanine financing and dual-role lenders. First American strongly encourages early collaboration with experienced underwriters when navigating these layered transactions.
EB-5 and C-PACE: Emerging Capital Sources
Two growing – but complex – financing structures are becoming increasingly important: EB-5 investment financing and commercial property assessed clean energy (C-PACE) loans.
Following the 2022 Integrity Act reforms, EB-5 project funding is gaining legitimacy. However, these deals often involve bridge loans, subordinate debt, and uncertain funding timelines, requiring early and experienced underwriting support.
C-PACE has exploded in popularity, with more than $7 billion in deals in 2023 alone. While often associated with sustainability, C-PACE is increasingly used for resilience improvements – think hurricane protection in Florida or fireproofing in California.
C-PACE at a Glance:
- 40+ states have adopted or are implementing C-PACE.
- Rules vary by state. Title professionals must stay up to date.
- C-PACE is becoming vital to both capital stacks and insurance affordability.
Regulatory Spotlight: Legislative Shifts and Rising Risks
Title Waiver Pilot program – Fannie Mae has revived its controversial Title Waiver Pilot, allowing lenders to skip lender’s title insurance for low-LTV refinances in exchange for a fee. A private version, “Track Light,” is also circulating.
Attorney Opinion Letters (AOLs) – The Government-Sponsored Enterprises (GSEs) are expanding their acceptance of AOLs including for properties in homeowners associations (HOAs) and condos – despite data showing 30% of Americans live in community associations. This shift increases risk exposure for lenders and buyers.
“Junk fee” pressure from the CFPB – The Consumer Financial Protection Bureau (CFPB) is investigating how closing fees are set. First American and the American Land Title Association (ALTA) are defending title insurance as transparent, regulated, and value-driven, noting that:
- 52 cents of every $1 in a title policy goes to payroll.
- Only 8 cents is retained as profit.
- Title insurance + settlement = less than .7% of borrower’s lifetime loan cost.
State of the Economy: Inflation, Rates, and Economic Headwinds
A deep dive into the state of the economy, particularly inflation trends and monetary policy impacts, revealed that:
- Inflation peaked mid-2022 but remains sticky, especially in shelter and services.
- Goods inflation turned to deflation, but that effect is fading.
- The Fed has slowed rate cuts due to persistent inflation pressure.
Fed rate projection:
- The September 2023 estimate for 2025 is 3.4%.
- The current estimate is 3.9%, indicating only two possible cuts this year.
What’s the translation for real estate? Expect mortgage rates to hover between 6-7% for the remainder of 2025.
Housing Market: Inventory, Affordability, and Locked-In Owners
One of the core issues driving today’s housing woes is inventory shortage. We’ve been underbuilding since 2006, with a deficit of 2 to 7 million homes nationwide.
Even though construction has slowly increased, a surge in household formation – especially during the pandemic – has far outpaced supply. Compounding the issue is that most homeowners are “rate-locked” into sub 6% mortgages and are reluctant to sell.
- Just 1.5% of the total housing stock is currently for sale.
- That’s 134 homes per 10,000 households.
Unsurprisingly, prices continue to rise. And while Memphis leads as the most affordable market for renters transitioning to ownership, even these markets are heating up fast.
Stay ahead in a changing landscape.
Whether it’s rising fraud, evolving finance structures, regulatory threats, or persistent housing shortages, title agents are operating in a landscape that’s anything but static. By staying informed, leveraging the right tools, and partnering early with an experienced underwriting team, you can mitigate risk and deliver value to your clients – even in the most complex transactions.
Looking for more education and support?
Here are some additional resources provided by First American’s experts:
- The REconomy Podcast
- First American Economic Center
If you’re a First American agent, you can access the recording of this webinar by clicking here.