"Many of the concerns that have been raised target traditional AOLs and do not contemplate the coverage provided by the modernized version," Hallman Eady and Spencer Mobley, partners at law firm Bradley, said in a recent report on attorney opinion letters commissioned by Alita.

The commentary finds that an AOL wrapped with an errors and omission policy and a closing protection letter such as Alita's "addresses significant title-related risks, including the most commonly encountered," which makes it "a viable option" for mortgage and real estate industries.

Critics have contested the degree to which attorney opinion of title letters can safely compete with traditional insurance as key mortgage investors increasingly offer increased latitude for alternatives and test waivers as a means of potential means of lowering closing costs.

The new white paper references other legal commentaries commissioned separately by the American Land Title Association and Mortgage Bankers Association. The attorneys also note that the Consumer Financial Protection Bureau's recent closing cost inquiry makes it timely.

ALTA issued a statement indicating it didn't consider the report's conclusions as being that far off from its own, while noting that title insurance alternatives are something that could expose lenders to "significant unforeseen costs."

"AOLs lack coverage for title defects not discoverable from a search of the public records, and typically don't cover fraud and forgery," the association said, citing a Milliman study that finds almost 30% of title insurance losses and claims costs come from issues outside public records.

The report acknowledges that historically title insurance came into being because of shortcomings in traditional AOLs, and that even when coupled with additional protections, it "is not identical to title insurance."

It also notes that an attorney's opinion based on a standard title search and related protections mentioned, respectively, may not find or cover property ownership conflicts outside the public record. This could include fraud.

However, the report finds the E&O policy "insures the abstracting and closing services provided, which account for the largest share of losses reported by title insurers" and notes there are different additional protections that can be added to address risks that may differ by loan.

"Each lender or homeowner will need to engage in a cost-benefit analysis and choose the most appropriate form of coverage for the circumstance," the Bradley attorneys wrote.