Legislative Proposal to Ban Trigger Leads Offers Consumers Hope of Long-Needed Relief

Blog posted On April 27, 2023

Last week, Rep. Ritchie Torres of New York introduced bill H.R. 2656 in hopes of ending the sale of trigger leads, which could greatly reduce the number of unsolicited calls a consumer receives after applying for a mortgage. Oftentimes, trigger leads cause confusion for buyers because they can come from competing lenders who are asking for personal information. Although this bill is still in the early stages, it’s a good (and far overdue) step in the right direction.

What is a trigger lead?

When a home buyer applies for a mortgage, the lender is obligated to conduct a credit check. The process of creating a trigger lead goes something like this:

1. The lender submits a credit inquiry on the applicant to a credit bureau
2. This notifies the credit bureau that the applicant is interested in home financing
3. This ‘trigger lead’ is then sold by the credit bureau to other companies like data brokers, other lenders, etc. without the knowledge of the applicant
4. The applicant will then start receiving unsolicited phone calls, emails, letters, etc.  asking for personal information

Doesn’t seem to make sense, does it? And yet there’s no way around it. Mortgage lenders are required to check an applicant’s credit before issuing financing, and the check has to go through an accredited bureau (TransUnion, Experian, or Equifax).

What the industry is saying

“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,” writes HousingWire Mortgage Reporter, Connie Kim. “If the bill is signed into law, it would amend the Fair Credit Reporting Act to prohibit the creation and sale of 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.”

The law would provide consumers some “long-needed relief” by ending the “dangerous practice” of trigger leads, said Ernest Jones Jr., president of the National Association of Mortgage Brokers (NAMB). Many loan officers are in favor of the proposal.

“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.

While there is still more work to be done, the proposal is positive step towards protecting consumers and simplifying their mortgage experience.

We will keep you updated as more information about the status of the proposal is released.

Sources: HousingWire