Are trigger leads close to getting corked?

Legislation regulating the use of trigger leads, long a hot button topic in the mortgage industry, has come closer to becoming law as it has been included as an amendment to one of the federal budget bills.

The Senate's version of the National Defense Authorization Act includes a rule that bars the furnishing of a credit report pulled for a mortgage loan to anyone else unless the consumer approves. The language also allows for the report to be provided to the current mortgage lender and/or servicer on an existing loan. The bill also has an exemption for banks and credit unions.

This information can also be provided to anyone who "holds a current account for the consumer to whom the consumer report relates," the language of the amendment states.

The original bill, the Homebuyer Privacy Protection Act, was introduced in the Senate last December by Jack Reed, D.-Rhode Island, and has 43 co-sponsors from both parties, including Bill Hagerty, R.-Tennessee as the original co-sponsor.

An identical piece of legislation was introduced in the House of Representatives by John Rose, R.-Texas as the lead sponsor and 10 original co-sponsors.

However, both bills languished since then; past efforts to regulate trigger leads were also unsuccessful. In July, both the Mortgage Bankers Association and the Independent Community Bankers Association came in support of Haggerty and Reed's amendment to include this in the National Defense Authorization Act.

That amendment was just included as a manager's amendment to the Senate version of the NDAA by Reed as chairman of the Armed Services Committee and Ranking Member Roger Smith, R.-Mississippi.

"MBA has led a diverse set of coalition partners to help advance needed reforms that would curb trigger lead abuses while preserving their use in appropriately limited circumstances during a real estate transaction," a statement from Bob Broeksmit, president and CEO, said.

"We commend the bipartisanship leadership of Hagerty and Chairman Reed, along with their 40 bipartisan Senate cosponsors, to advance this carefully-calibrated consumer protection amendment as part of the NDAA debate," the statement continued.

The Community Home Lenders of America earlier this year sent a letter to the Consumer Financial Protection Bureau comparing trigger leads with its efforts to crack down on junk fees, also applauded this development in its own statement.

"The passing of S.A 2358 would protect veterans, active-duty service members, and other consumers from abusive trigger leads," said Rob Zimmer, director of external affairs for the CHLA, referring to amendment number. "Reigning in abusive trigger leads has been an initiative that CHLA has spearheaded for nearly two years.

The National Association of Mortgage Brokers, whose members have also complained about the marketing tactic some originators employ, is another entity pleased with this development.

The group "celebrates the inclusion of the trigger leads bill in the NDAA manager's amendment, particularly thanks to Sen. Reed's efforts," a statement from NAMB President Valarie Sanders declared.

"NAMB has long advocated for this measure and is proud to have collaborated with lawmakers to eliminate this unnecessary practice, ultimately benefiting millions of consumers across the nation."

But this bill is still a bit away from becoming law, the comments noted.

"We urge the House and Senate to pass the conference report to the NDAA and for the president to quickly sign this into law," Zimmer said.

The MBA statement noted it "will continue to work with lawmakers on both sides of the aisle — including trigger lead reform champions Rep. John Rose, R.-Tennessee and Ritchie Torres, D.-New York — to highlight the importance of preserving this important proposal during the forthcoming Senate debate and eventual NDAA negotiations between House and Senate leaders later this year."