In an industry dominated by private insurers, Iowa Title Guaranty (ITG) continues to operate as a state-run, not-for-profit title system that gives homebuyers a more affordable avenue for settlement services.
Iowa bans private commercial title insurance in favor of its unique state-backed model. It’s a a system that has saved homeowners thousands in closing costs but has also faced pushback from the national title insurance industry.
The Hawkeye State’s departure from traditional title insurance began in the mid-20th century when private title insurers left homeowners and lenders without recourse after a series of title claim failures.
“Historically speaking, we had title insurance companies in Iowa until the 1940s,” said Dillon Malone, director of Iowa Title Guaranty. “A couple of those domestic insurers went under or went out of business, leaving owners and lenders with significant losses. The legislature got wind of this and, in 1947, passed a bill that effectively wiped out title insurance in Iowa.”
Following the ban on private title insurance, Iowa relied solely on attorney opinion letters (AOLs) until ITG was established in the 1980s. Today, ITG provides a cost-effective alternative to private title insurance by ensuring that title opinions are backed by state oversight.
Last year, ITG provided services on $15.4 billion in residential real estate transactions and $764 million in commercial real estate transactions. It also issued more than 23,000 closing protection letters for lenders and filed 373 mortgage releases.
Cost savings for homebuyers
Compared to other states, Iowa homeowners pay significantly less for title coverage.
“For a residential transaction under $750,000, our policy is $175, and that covers both the owner and lender,” Malone explained. “For purchase transactions, we charge $175 for the lender, and the owner gets free coverage if the home price is under $750,000.”
In contrast, traditional title insurance in other states often costs homeowners thousands of dollars.
“I just bought my house two years ago, and they initially quoted me private title insurance rates,” Malone said. “It was significantly higher — in the $1,500 to $2,000 range — compared to the $175 we offer. There’s definitely sticker shock when people move here and realize how much they’re saving.”
Additionally, ITG reinvests excess revenue into homeownership programs, furthering the potential savings for homebuyers.
“All of our excess revenue goes to support homeownership for first-time and low-income buyers,” Malone said. “If the broader industry could find ways to directly support homeownership beyond one-time grants, that would be meaningful.”
In 2024, these efforts included $1.2 million to assist homebuyers with down payments, part of $73.3 million going toward this purpose since the program’s inception.
Beyond the state-backed title insurance cost, Iowa homeowners still pay for abstracting (a title opinion from a vetted attorney) and closing fees. But even with these added costs, the system remains significantly cheaper than private title insurance in other states.
AOL vs. title insurance
Unlike private insurance models that primarily rely on automated or digital title searches, ITG requires an attorney’s title opinion based on a 40-year abstract before issuing a policy.
“We vet all attorneys to ensure they have real estate experience or a mentor in the field,” Malone said. “This is different from what’s being proposed nationally, where vendors allow any licensed attorney to provide an opinion without requiring deep real estate experience.”
While national entities, such as the government-sponsored enterprises Fannie Mae and Freddie Mac, have explored the use of AOLs instead of title insurance to reduce costs, ITG remains skeptical about abandoning traditional title coverage altogether.
“We recognize the value in the American Land Title Association (ALTA) policy form,” Malone said. “It provides far better coverage for lenders and owners than just a title opinion alone. A title opinion is great, but coupling it with an ALTA policy is even better.”
Industry pushback to Iowa model
The title insurance industry has long viewed Iowa’s system as an anomaly, and there have been multiple attempts to alter the state’s approach.
“Back in 1977, Chicago Title Insurance challenged the ban on title insurance and took it to the Iowa Supreme Court,” Malone recalled. “The court upheld the law as a legitimate exercise of legislative power. Chicago Title then petitioned the U.S. Supreme Court, which declined to hear the case.”
Since then, there have been various legislative efforts to introduce commercial title insurance in Iowa, particularly in the early 2000s, Malone said.
“We haven’t seen a legitimate attempt in many years,” he said. “But we keep an eye on potential legislative changes every session. Our peers in the other 49 states now see us as just another underwriter and ALTA member, rather than as a challenge to their industry.”
Despite industry resistance, other states have shown interest in Iowa’s model.
“Almost every year, we get inquiries from state legislative offices about setting up a similar system,” Malone said. “Last year, New York had two bills proposing something similar. The year before, Connecticut had one. A state senator in California frequently reaches out with questions. While these inquiries don’t usually go anywhere, there’s consistent interest.”
Future of nationwide title reform
With ongoing national debates about home affordability, the title insurance industry has faced increasing scrutiny over what some perceive to be its role in the rising costs of buying and selling a home.
In Texas, regulators recently ordered a 10% reduction in title insurance premiums — a rare instance of sweeping state intervention across a highly consolidated industry.
Malone believes that while there is room for reform, outright title insurance waivers may not be the best solution.
“People assume Iowa would support the title waiver pilot proposed by the previous administration, but we don’t,” he said. “We recognize the value in traditional title insurance policies, and we don’t believe title opinions alone provide sufficient protection.”
The title waiver pilot was first announced by President Joe Biden in March 2024 with the stated goal of reducing closing costs as part of a broader “war on junk fees.” The Federal Housing Finance Agency later approved the pilot.
Since then, the pilot has received significant pushback from the title insurance industry and members of Congress. What comes next with the program under the new Trump administration remains unclear.
A study released in January by George Mason University’s Antonin Scalia School of Law found that the title waiver pilot could save borrowers $2.19 billion, or roughly $1,700 per home loan.
As an alternative, Malone advocates for responsible industrywide reforms that lower costs without sacrificing consumer protection.
“The title industry could do more to communicate its value,” he said. “Yes, our claims loss ratio is low, but that’s because so much of our work is done before closing. We prevent issues before they become claims.”
As the housing market continues to evolve, ITG’s success may provide a blueprint for future reforms if other states are willing to follow suit.
“The only similar model (to Iowa) I can think of is the National Flood Insurance Program, and maybe what’s been done in Florida with their state solution for homeowners (insurance),” Malone said. “But we’re the only state-run title guaranty program, and we’re very happy to continue being here to provide those services.”
