'Trigger Leads' Stir Controversy

The use of "trigger leads" to solicit mortgage customers is raising concern among state regulators and mortgage lenders, according to William Lund, director of the Maine Office of Consumer Credit Regulation.Mr. Lund told MortgageWire that some complaints have come from mortgage lenders concerned about tactics used by competitors who receive trigger leads from credit reporting agencies. Speaking at the New England Mortgage Bankers Conference in Providence, R.I., Mr. Lund said Maine is considering whether trigger leads should be regulated to prevent misleading solicitations. Trigger leads occur when a credit reporting agency sells information about credit requests from lenders, indicating that a consumer is applying for a mortgage loan. That information, when sold to a competing lender or broker, allows the originator to contact the customer and make a competing offer. Mr. Lund said this does not necessarily violate any rules or ethics. But in some cases, brokers or lenders have been accused of calling consumers and pretending to be their current lender offering a new loan product, or pretending that a referral was made because the original lender cannot fund the loan. Those practices may violate the Federal Fair Credit Reporting Act, he said.