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Hoping the third time will be the charm, mortgage brokers and independent mortgage lenders are once again rallying behind legislation aimed at banning the creation and sale of trigger leads — information that credit bureaus sell to mortgage lenders when consumers are seeking a mortgage from another lender.
If the fate of identical bills introduced in the 116th and 117th Congresses is any indication, legislation introduced in the House of Representatives Monday by New York Democrat Rep. Ritchie Torres, HR 2656, is likely to die not with a bang, but a whimper.
Like an identical bill Torres introduced last year, The Trigger Leads Abatement Act of 2022, HR 2656 was promptly referred to the House Committee on Financial Services, where it may never get a second reading.
Such was the fate of yet another bill aimed at accomplishing the same aim, HR 5720, introduced in January 2020 by former Missouri Democrat Rep. Lacy Clay, who was unseated later the same year by primary challenger Cori Bush after serving 20 years in Congress.
Tellingly, none of the three bills — HR 2656, HR 7661 or HR 5720 — has attracted a cosponsor from either party.
But in announcing its “full support” for HR 2656, the National Association of Mortgage Brokers (NAMB), a trade association representing mortgage brokers since 1973, is casting the bill’s prospects in a more optimistic light.
“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,” the group said in a press release Tuesday.
As it did when issuing a nearly identical press release last year in support of HR 7661, NAMB argued that “contacting the consumer during the complex mortgage process is harmful and confusing and opens up the possibility of fraudulent behaviors and deceptive activity.”
HR 2656 would prohibit credit bureaus from furnishing credit reports not initiated by consumers, “if the report is being procured based in whole or in part on the presence of an inquiry made in connection with a residential mortgage loan.”
Good for consumers?
While being bombarded with offers from other lenders after applying for a mortgage may seem like a nuisance, trigger leads are allowed by the Fair Credit Reporting Act. Lawmakers and federal regulators like the Federal Trade Commission (FTC) and Consumer Finance Protection Bureau (CFPB) have concluded that more competition between mortgage lenders is good for consumers, who often don’t shop around for the best rate.
The Fair Credit Reporting Act does give consumers the right to opt out of receiving preapproved or prescreened offers of credit. Credit bureaus aren’t allowed to provide credit files to lenders making such “firm offers” of credit if they’ve opted out.
“Lenders making timely credit offers can maximize consumers’ choices when they need it most,” the Consumer Data Industry Association, a trade association that represents the credit bureaus, said in a statement to Inman. “When shopping for a mortgage this can mean saving thousands of dollars. In a time when interest rates and housing prices remain elevated, this can help people afford the right home for them.”
Each of the three major credit bureaus — Equifax, Experian and TransUnion — offers trigger lead services to mortgage companies and other lenders (none responded to requests for comment from Inman).
“Using our mortgage inquiry triggers solution, you can monitor a defined population of consumers and receive automatic, daily alerts on those who have a new mortgage inquiry and meet your credit quality requirements,” TransUnion tells lenders on its website. “The ability to reach out to these mortgage loan leads right when they are shopping and ready to act can be the difference between converting and losing a mortgage prospect.”
Equifax touts higher open rates with TargetPoint Triggers service
Source: Equifax marketing brochure
In a marketing brochure for its TargetPoint Triggers service, Equifax claims that open rates on “triggered” marketing pitches are more than four times higher than non-triggered pitches.
Three industry groups seeking to ban trigger leads
In addition to NAMB, at least two other industry groups — the Mortgage Bankers Association (MBA) and the Association of Independent Mortgage Experts (AIME) — have supported legislation aimed at banning trigger leads in the past.
AIME, which competes with NAMB to represent mortgage brokers, launched a PAC and more than doubled its spending on lobbying in 2022.
According to AIME’s 2022 Advocacy Annual Report, “trigger lead reform” was the group’s fourth-highest priority last year, attracting 10.1 percent of contributions to the group’s Broker Action Coalition Political Action Committee (BACPAC).
Source: AIME 2022 Advocacy Annual Report
“Trigger leads are beyond a nuisance to American consumers,” AIME’s report reads. “They are invasive violations of privacy. It is time to clean up the practice and further regulate and restrict their use.”
But according to a database maintained by OpenSecrets, a nonprofit that tracks money in U.S. politics and its impact on elections and public policy, the MBA was the only group registered to lobby on HR 7661, the bill targeting trigger leads that Torres introduced last year.
According to Lobbying Disclosure Act (LDA) reports made public by the U.S. Senate, the MBA reported $520,000 in lobbying expenditures during the third quarter of 2022 on HR 7661, and other bills, and $570,000 in expenditures during the fourth quarter.
Bill Killmer, the MBA’s senior vice president of legislative and political affairs said in a statement provided to Inman that the group also supports the identical bill Torres introduced Monday, HR 2656.
The MBA “believes that trigger leads need to be reined in and this bill is a good start,” Killmer 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.”
Editor’s note: This story has been updated with a statement from the Consumer Data Industry Association, a trade association that represents credit bureaus.
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