Voxtur to launch title insurance alternative for VA loans

Voxtur, a real estate technology company, plans to release an attorney title opinion letter for mortgages guaranteed by the Department of Veterans Affairs, building on a product line it’s been growing.

The new product will be based on a recent revision to the Department of Veterans Affairs’ handbook for lenders, which provides some guidance in situations where an attorney’s opinion letter is used, according to the company.

“The VA has never required a lender making a VA loan to obtain title insurance, stating in its lenders handbook that the lender may instead apply its owner title insurance requirements to VA loan transactions,” Voxtur said in a press release issued Tuesday. “The lenders handbook now provides that effective Sept. 29, the provisions regarding title insurance have been revised to include attorney opinion letters.”

An attorney title opinion letter can save a borrower as much as an entire mortgage payment, but insurers have raised questions about whether forgoing coverage introduces too much risk.

Voxtur has dismissed those concerns.

“The use of attorney opinion letters as an alternative to title insurance is an established practice that provides security and coverage to the lender and borrowers comparable to that of title insurance,” CEO Jim Albertelli said in an emailed statement. “As this alternative continues to grow in popularity, we anticipate that misinformation will continue to be released, particularly by those that see an alternative product as a competitive threat.”

Use of the letters as an alternative to title insurance has been growing since major government-related mortgage buyer Fannie Mae joined its smaller competitor, Freddie Mac, in cautiously greenlighting limited use of them.