Lender group turns to CFPB to stop trigger leads

Now that the trigger leads legislation was removed from the National Defense Authorization Act, one group of supporters is proposing a regulatory workaround.

In September, the industry was heartened that its years-long fight against the use of the controversial lead generation method was finally coming to a successful end as it was included in this budgetary bill in the Senate.

Rep. Ritchie Torres, D.-New York, also expressed optimism that the bill had support in the House of Representatives, while speaking at the American Bankers Association convention.

But last week, the Broker Action Coalition broke the news on LinkedIn that after several weeks in limbo, the trigger leads portion of the NDAA was removed.

The Community Home Lenders of America is now turning to the Consumer Financial Protection Bureau, looking for it to do the job, by using the Fair Credit Reporting Act, either through issuance of guidance or if necessary, the use of rulemaking procedures.

"The firm offer of credit requirement has been loosely interpreted to date and it is difficult to monitor, so it is understandable that the practice of mortgage trigger leads has been widespread," said the CHLA letter, addressed to CFPB Director Rohit Chopra and copied to Federal Trade Commission Chair Lina Khan. "However, tightening up on the standards for a firm offer of credit could substantially rein in abusive mortgage trigger leads."

The starting point for its proposed regulatory action makes a presumption that a mortgage trigger lead solicitation does not meet FCRA's firm offer of credit requirement. That would make it not permissible, but gives a carve out for if the mortgage lender originated the current loan or otherwise has an existing relationship with the borrower.

"We would also note there may be other federal laws under which regulators could issue guidance to rein in abusive mortgage trigger lead solicitations, such as the Telephone Consumer Protection Act and the CAM-SPAM Act," CHLA wrote.

"However, we believe the most direct and effective way to address these problems administratively is through the approach suggested in our letter."

A previous CHLA letter to the Bureau referred to trigger leads as "junk calls," referencing the Biden Administration's take on junk fees in the homebuying process.

While not commenting on the letter, the Mortgage Bankers Association is looking at the legislative branch first for a solution, preferably in the current term.

"MBA will keep working with our congressional allies to explore any remaining options to get this important, bipartisan bill considered in the final days of the current session," Bill Killmer, senior vice president for legislative and political affairs, said in a statement. "If that doesn't occur, we will work aggressively to advance this needed change to mortgage credit trigger leads policy with other stakeholders next year. 

"In the short term, we are disappointed that consumers who remain vulnerable to trigger leads abuses may not see relief heading into the spring home buying season," Killmer continued.

National Mortgage News has reached out to the CFPB for a response.