The inclusion of a nationwide trigger lead ban into the Senate’s Fiscal Year 2025 National Defense Authorization Act (NDAA) has drawn praise from the lending industry.
The NDAA, which specifies the annual budget of the U.S. Department of Defense, is authorized by Congress every year. Through the Homebuyers Privacy Protection Act, introduced by Sen. Jack Reed, D-R.I., and Sen. Bill Hagerty, R-Tenn., late last year, this year’s version of the NDAA includes an amendment to the Fair Credit Reporting Act severely limiting consumer reporting agencies from selling financial data to lenders when certain events, like when a borrower applies for a mortgage, are triggered (hence the term “trigger leads”).
Reed, who serves as the chairman of the Senate Armed Forces Committee, was joined by Ranking Member Sen. Roger Wicker, R-Miss., in filing that amendment within a package of others into the NDAA yesterday. The NDAA will now proceed to a floor debate in the Senate before being reconciled with the House of Representatives’ own version of the NDAA; a conclusive vote on the final NDAA agreement for the fiscal year will likely end up happening after Election Day.
Per the text of the Homebuyers Privacy Protection Act, if a consumer requests a credit report from a consumer reporting agency, that agency may not furnish that consumer’s data to a third party solely on the basis of that request (the “trigger”). The bill offers some exceptions to this ban, including;
- If the third party is the originator or the servicer of the consumer’s current mortgage.
- If the third party is an insured depository institution or credit union and holds a current account for the consumer asking for the credit report.
- If the third party has submitted documentation submits documentation certifying that they have the authorization of the consumer.
If passed, the legislation would have far-reaching implications for lead generation industry-wide. Mortgage brokers have long pushed for restrictions to trigger leads, with banks also recently joining the chorus, since the practice often leads to fractured trust with borrowers.
Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA), lauded the inclusion of the Homebuyers Privacy Protection Act in the NDAA.
“MBA has led a diverse set of coalition partners to help advance needed reforms that would curb trigger lead abuses while preserving their use in appropriately limited circumstances during a real estate transaction,” Broeksmit said. “We commend the bipartisanship leadership of Senator Bill Hagerty and Chairman Reed, along with their 40 bipartisan Senate cosponsors, to advance this carefully calibrated consumer protection amendment as part of the NDAA debate.
“MBA will continue to work with lawmakers on both sides of the aisle — including trigger lead reform champions Rep. John Rose (R-TN) and Ritchie Torres (D-NY) – to highlight the importance of preserving this important proposal during the forthcoming Senate debate and eventual NDAA negotiations between House and Senate leaders later this year.”
So too did Rob Zimmer, director of external affairs for the Community Home Lenders of America (CHLA).
“The passing of S.A 2358 would protect veterans, active-duty service members and other consumers from abusive trigger leads,” Zimmer said. “Reigning in abusive trigger leads has been an initiative that CHLA has spearheaded for nearly two years. We urge the House and Senate to pass the conference report to the NDAA and for the president to quickly sign this into law.”
