A bill introduced in Congress Monday may curb the amount of unwanted solicitations borrowers receive after they start the application process to buy or refinance a home.
The proposed legislation would prohibit consumer reporting agencies from sending out leads in connection with a credit transaction not initiated by a consumer, specifically if the report is being procured based on an inquiry made in connection with a residential mortgage loan.
Credit bureaus sell trigger leads, created when a consumer applies for a mortgage, to home lenders, insurance companies and credit card providers.
Industry stakeholders argue that this practice creates confusion for consumers who are inundated by calls, emails and texts from companies. Trigger leads can also create unfair competition among mortgage lenders, especially at a time when
According to industry consultant Paul Hindman, trigger leads are getting a lot of attention in the mortgage industry "because companies are
Hindman also noted that many consumers are not aware that there is a national Do Not Call registry, which has "tremendous power" to stop these types of solicitations.
Trade groups, including the National Association of Mortgage Brokers, the Mortgage Bankers Associations and the Community Home Lenders of America, voiced their support for the pending legislation.
NAMB, a long time supporter of ending trigger lead practices, issued a statement Tuesday noting
that contacting a consumer during the complex mortgage process "is harmful and confusing" and opens up the possibility of fraud.
"NAMB is grateful for the hard work of Representative Torres and the 118th Congress for introducing H.R.2656, that would deliver long needed relief to consumers and the mortgage marketplace by ending the dangerous practice of trigger leads," said NAMB President Ernest Jones Jr, in a written statement.
Scott Olson, executive director of the CHLA, called trigger leads "harmful" and "incredibly annoying to consumers."
"In fact, last November, CHLA wrote to the [Consumer Financial Protection Bureau's] Director Chopra, asking the CFPB to scrutinize the area where we believe consumers are most vulnerable - a family taking out a mortgage loan application to finance the purchase of a home."
In its letter to the CFPB, the CHLA outlined experiences of its own members applying for a mortgage, which included a member receiving 60 phone calls, texts and emails within 48 hours of a mortgage application. Another CHLA member applying for a loan received 10 marketing calls within 43 minutes as a result of the trigger lead process, the trade group's letter said.
"The sheer numbers of calls our members receive from confused consumers regarding the deluge of trigger leads they experience has only increased since the rate environment changed earlier this year," CHLA's letter from last year said. "We expect this trend will only worsen as lenders vie more intensely for market share."
It is unclear whether the CFPB plans to undertake a review of the trigger lead process. The bureau did not immediately respond to a request for comment.
