Pair of Recent Bills Introduced to Curb Mortgage “Trigger Leads”
Written By: Joel Palmer, Op-Ed Writer
Members of Congress and mortgage industry leaders have spent the past year attempting to eliminate trigger leads.
Trigger leads occur when credit bureaus sell a potential borrower’s information after a credit application “triggers” a credit report pull. The credit bureaus can sell the lead to data brokers and other lenders without the consumer’s knowledge or approval.
In the past, this type of lead has been spun as a positive to consumers, as they can potentially receive more competitive offers when seeking credit, especially mortgages. However, according to those trying to halt the practice, trigger leads instead cause borrowers to be inundated with aggressive marketing pitches, including unsolicited calls, texts, and mailings.
In a letter to the Consumer Financial Protection Bureau (CFPB), the Community Home Lenders Association (CHLA) wrote: “The impact is much more harmful for mortgage loans for purchase of a home. Such loans represent a large, complicated financial transaction, that provides a disproportionate incentive to use deceptive tactics to induce a borrower (who a lender may have been helping for many months) to switch lenders. The result is usually an avalanche of so-called mortgage loan offers – by phone, by email, and by text – which far exceeds other financial products where credit bureaus sell their financial information.”
CHLA added: “We are not saying consumers would not benefit from shopping around for a home purchase mortgage or by comparing terms and rates. However, trigger leads are the wrong way to accomplish this objective.”
At least two members of Congress agree.
Last year, Rep. Ritchie Torres (D-NY) introduced the Trigger Leads Abatement Act. In April 2023, he reintroduced the bill. Last month, Rep. John Rose(R-TN) introduced the Protecting Consumers from Abusive Mortgage Leads Act.
The National Association of Mortgage Brokers (NAMB) applauded Torres’s bill, which would ensure that no consumer reporting agency may furnish a consumer report in connection with a credit transaction that is not initiated by a consumer, if the report is being procured based in whole or in part on the presence of an inquiry made in connection with a residential mortgage loan. Consumers would have to opt-in to allow credit reporting agencies to sell information to a trigger list subscriber.
“NAMB is honored to have worked with members of congress on this critical legislation and today we hope these efforts will help many people across the nation to end this terrible practice that places undue hardships on consumers, mortgage professionals and the entire marketplace.”
Rose said his bill would prohibit a consumer reporting agency from furnishing a trigger lead unless the third party certifies to the consumer reporting agency that the third party has a current relationship with the consumer.
“Buying a home is stressful enough for many consumers. The last thing most folks want is to be annoyed incessantly by the constant barrage of emails, text messages, and phone calls after they apply for a mortgage,” said Rose. “My bill would put an end to this shady and confusing practice and restore data privacy for homebuyers.”
CHLA sent a letter to Rose asking him to consider revisions to his bill, including the eligibility criteria.
Both bills have been referred to the House Committee on Financial Services and are awaiting debate.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
