NAMB welcomes legislative proposal to ban use of trigger leads

The legislative proposal would deliver 'long-needed relief' to consumers and the mortgage marketplace, NAMB said

The National Association of Mortgage Brokers (NAMB), an association representing the interests of individual mortgage loan originators and small to midsize mortgage businesses, is welcoming the introduction of a bill that would end the sale of trigger leads.

The bill, H.R. 2656, was introduced by Representative Richie Torres of New York on April 17, and would amend the Fair Credit Reporting Act to prohibit the creation and sale of trigger leads — which the association has been urging Congress to do since at least 2018. 

This legislative proposal would deliver “long-needed relief” to consumers and the mortgage marketplace by ending the “dangerous practice” of trigger leads, Ernest Jones Jr., president of NAMB, said in a statement. 

Trigger lead takes place when a consumer applies for a mortgage. The inquiry to credit by a mortgage company is a trigger that notifies the credit bureau that the consumer is interested in applying for financing. Then the trigger lead is then sold by the credit bureau – including Experian, TransUnion and Equifax – to data brokers, including competing mortgage companies, without the consumer’s knowledge or approval. 

The leads consist of names, contact information and other data, including a significant amount of personal information, related to those who recently applied for a mortgage.

Consumers may then be contacted by competing companies who purchased the trigger leads, which often creates confusion for borrowers and may prompt them to send personal information they may not have intended to share with other lenders. 

However, H.R. 2656 would ensure that no consumer reporting agency can provide a consumer report in connection with a credit transaction that is not initiated by a consumer.

At a time when interest rates and housing prices remain elevated, maximizing consumers’ choices can help people afford the right home for them, the Consumer Data Industry Association (CDIA) told HousingWire.

“Lenders making timely credit offers can maximize consumers’ choices when they need it most. When shopping for a mortgage this can mean saving thousands of dollars,” the CDIA said.

“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,” Jones Jr. said.

It’s still early on in the process before it becomes a law, but this bill is a good start, the Mortgage Bankers Association (MBA) said.

“We will work with Congressman Torres and lawmakers from both sides of the aisle to stop unwanted harassment of consumers and maintain a well-functioning market, MBA’s Bill Killmer, SVP of legislative and political affairs, said.

Loan officers took to social media to support the “long overdue” legislative proposal.

“I can’t begin to tell you the number of times a client in processing calls one of my LO’s to question the bombardment of phone calls from ‘internet-call center’ sweat shops offering a much lower rate and faster closing… and within moments of their loan application,” a senior loan officer based in South Carolina, wrote on LinkedIn

Another loan officer in California noted that clients get a lot more calls than before from competing lenders after a credit inquiry, causing confusion to consumers and making business a lot harder for LOs.

“It used to be that every once in a while a client would say they got a call soliciting them because of a recent credit inquiry but lately it’s gotten terrible and numerous times getting 15 calls in an hour. Often they represent themselves as someone the borrower is familiar with and quote outrageously low rates with a ton of points or try the old bait and switch,” the loan officer said.

HousingWire reached out to Equifax, TransUnion and Experian for comment. However, none of the three credit bureaus responded. This story will be updated and/or follow-up coverage will be added if the bureaus respond.

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