Mortgage trade groups plan to make another run at getting a partial ban on “trigger leads” passed in Congress. Last year’s failed legislation will be resurrected, mortgage leaders told Scotsman Guide this week.
“There’s talks happening already in D.C. with different interested members of Congress and the Senate on the most intelligent way to reintroduce it,” said Brendan McKay, chief advocacy officer for the Broker Action Coalition.
“So, yes, we absolutely expect it to get reintroduced,” he said on Wednesday. Â
Trigger leads are generated when a person’s credit score is pulled after applying for a mortgage or other loan, triggering a lead that the credit bureaus can sell. The mortgage industry is united against the practice; however, lenders and brokers frequently buy trigger leads.
Some argue that these leads encourage competition, providing mortgage borrowers with more options that could save them money.
Mortgage trade groups, though, describe the practice as damaging. Consumers are routinely bombarded with annoying, unsolicited calls that give the industry a bad reputation, they say.Â
“If people weren’t harassing and abusive, then this wouldn’t be a problem,” said Scott Olson, executive director of the Community Home Lenders of America (CHLA).
CHLA polled its lenders, which nearly unanimously indicated they supported a ban, Olson said.
“One, the volume of them is harassing,” he said. “Number two, they don’t really follow the rules,” Olson added, noting that consumers often get calls with an initial offer that is later changed in a “bait-and-switch” move.
The practice also skims business from lenders and brokers who have established relationships with borrowers.
“It’s unethical for the credit bureau to charge me to pull a credit (report) and then turn around and sell my inquiry to 50 or 60 people,” said Jim Nabors, president of the National Association of Mortgage Brokers.
“I’m paying for a service that they’re providing me, and then they’re stepping up and selling that information to multiple sources who confuse the borrower.”
The industry came close last year to getting an amended version passed of the Mortgage Bankers Association-supported The Homebuyers Privacy Protection Act, but the measure ultimately died in the House of Representatives.
“There was bipartisan support in both the House and Senate for this bill,” Nabors said. “It literally passed the Senate unanimously. How often does that happen?”
McKay said he was optimistic that a renewed bill would gain traction, noting most of the cosponsors in the Senate and House were returning this year.
“While the bill does have to get reintroduced and, from a technical standpoint, you’re starting again, you’re really not,” McKay said. “Momentum carries from one Congress to another, and we’re all over it from day one. So, we’re definitely optimistic.”
Last year’s bill would have restricted the sale of trigger leads, requiring a consumer’s consent and limiting the sale of trigger leads to lenders who originated the loan and to lenders and servicers with a preexisting relationship with the borrower.
The credit bureaus and their lobby, the Consumer Data Industry Association (CDIA), opposed the measure.
“We believe any legislative solution should address the root cause — telephone calls — and maintain a competitive market that allows the consumer to shop for a better deal,” CDIA said in an emailed statement, noting that with mortgages “this can mean saving thousands of dollars and helping people afford the right home for them.”
The association added “mortgage lenders should not inundate consumers with unwanted telephone solicitations.”
CDIA noted that lenders who make written offers under existing law are required to provide the consumer with the ability to opt out of receiving future prescreened offers. Consumers can opt out of prescreened offers at optoutprescreen.com. The Federal Trade Commission has noted that it can take several weeks for solicitation calls to stop, however.
McKay said he strongly disagreed with CDIA’s claim that the problems are rooted in mortgage industry practices.
“The root problem is not phone calls,” McKay said. “The root problem is that credit bureaus are allowed to sell consumer data without their permission, and that’s wrong.”
Author
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Victor Whitman is a contributing writer for Scotsman Guide and a former editor of the publication’s commercial magazine.