Pyrochlore Y2Nb2O7 is studied with density functional calculations. In the ideal pyrochlore structure, no magnetism is found, consistent with experiments, but the band structure is metallic. The phonon dispersions show unstable modes corresponding to charge instabilities. These frustrated instabilities lead to a metal-insulator transition with the formation of "charge singlets". Partial substitution of Ti for Nb results in moment formation due to the occurrence of Ti3+.