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Mortgage Trigger Leads are About to become Illegal: Here's the Latest

On May 3, 2022, Congressman Richie Torres (D-NY) introduced a bill, "H.R.7661 Trigger Leads Abatement Act of 2022 To amend the Fair Credit Reporting Act," to ban the sale of mortgage financing inquiry trigger leads by credit bureaus to third-party companies and individuals. The bill was referred to the 117th United States Congress House Committee on Financial Services for further investigation. As of June 2022, the House Committee still has the bill under review, but many financial and legal experts believe that the sale and use of these types of leads will become illegal soon.

What Are Mortgage Trigger Leads?

When a mortgage company inquiries about credit after a consumer applies for financing during a purchase or refinance mortgage-related transaction, the act is described as a "trigger" that alerts credit bureaus of the consumer's action. One or more credit bureaus then sell the knowledge of the consumer's interest as a "trigger lead" to lenders and data brokers. The consumer never consents to selling their private data or approves any cold calls or contacts from these companies. 

Why Are Trigger Leads a Problem?

In short, credit bureaus receive money for private consumer financial data, and consumers receive seemingly never-ending phone calls, emails, and texts from telemarketers trying to sell them financial products. Even if a consumer has placed their name on the National Do Not Call Registry, they can still receive calls associated with mortgage trigger leads. Worse yet, the credit bureaus don't perform stringent enough background checks or safeguard the data against the purchase from criminals, which means that some consumers lose their savings and identities to fraud and other deception and theft schemes.

How Would H.R.7661 Help?

If approved, H.R.7661 guarantees that credit bureaus and other consumer reporting agencies can't provide consumer data from a residential mortgage loan inquiry to any third-party companies unless the consumer initiates the transaction. A previous similar bill failed to advance out of the committee investigation stage during the last session of Congress. Representative Torres emphasized during the introduction of his bill that Congress needs to address the problem sooner rather than later. He noted that mortgage trigger leads often lead to more "identity theft, fraud, and predatory lending." He also asked Congress to consider if businesses have the "right" to personal consumer data without a person's "knowledge or consent."

What Do the Credit Bureaus Say?

The credit bureaus and their clients seem to be the only agencies and companies that don't support the bill. They claim that mortgage trigger leads help consumers to receive more timely choices when they need help finding mortgage products and competitive rates. Justin Hakes, a spokesperson for the Consumer Data Industry Association trade group, told the media that trigger leads could save consumers "thousands of dollars" during higher housing prices and interest rates.

Who Supports the Bill?

Many consumers, lawmakers, and even the National Association of Mortgage Brokers (NAMB) don't see it that way. In a press release in May, the president of the nearly 50-year-old NAMB, Linda McCoy, applauded Representative Torres and his colleagues for introducing the bill. She referred to mortgage trigger leads as a "dangerous practice" that places "undue strain on consumers, mortgage professionals, and the entire marketplace." 

McCoy has experienced firsthand the dangerous nature of mortgage trigger leads: She tried to refinance a mortgage through another firm in fall 2022. Shortly after she applied, she received numerous unsolicited calls and texts. One of those calls was from a person claiming to represent her company, Mortgage Team 1. When she pointed out that she owned the company the caller claimed to represent, they hung up on her.

This ongoing news story will be updated on the TitleCapture Blog as new information becomes available.

 

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