It’s time we put up the guardrails and protect consumers from unlawful trigger leads

While we can’t share their names, we can share their stories. It’s the same, over and over again. An individual, often for the first time, participates in one of the most important transactions of their life: owning a home. The borrower is already intimidated by the multitude of financial requirements associated with getting a mortgage, but becomes even more overwhelmed by the hundreds, sometimes thousands, of emails, phone calls and text messages they receive from an unaffiliated external supplier after requesting his credit score. This invasive and often abusive marketing blitz, known as “trigger leads,” can open the door to identity theft, fraud and predatory lending, ultimately harming borrowers pursuing their dream of homeownership.

A trigger lead is a marketing product developed by the national credit bureaus (Experian, TransUnion and Equifax) and is used when a consumer applies for a mortgage, whether it is an outright purchase or a refinance. When a borrower’s credit is withdrawn by the lender, a tractor is sent to the credit reporting agency to indicate that a person is interested in applying for home financing. This trigger lead is then repackaged and sold to the vast chain of third-party brokers, completely unbeknownst to the borrower. The data sold to these third parties includes everything from a consumer’s date of birth to the last seven digits of their Social Security number.

While in theory they trigger leads should To introduce a borrower to a better, more competitively priced product, perverse financial incentives have led to an explosion of underperforming mortgage participants within the ecosystem. The reality is that many borrowers see more than fifty advertisements every day via email, text, and phone calls from unsolicited third parties looking to take borrowers away from their current lender and make money off their naivete.

The Community Home Lenders of America (CHLA) is shocked by the harm these practices are having on potential homebuyers and communities across our country. Our IMB members have experienced the anger, frustration and fear of homebuyers. One homebuyer was so concerned about the bombardment of requests and feared an invasion of privacy that he withdrew his loan application:

“I have decided to stop this process. Since I got approved I have been bombarded, totally disrupted and had my privacy invaded by potential lenders. I crushed the weekend warriors, but on Monday I received 47 calls and 10 texts. Tuesday was a bit quieter with only 15 calls, but today all hell broke loose again. I just don’t want it, and from someone who committed identity theft in 1996, when it was barely acknowledged, what I experienced was horrible… Thank you for your time, but this transaction has been closed.”

The non-transparent and widespread manner in which a borrower’s detailed personal information is disseminated puts homebuyers at increased risk of identity theft and fraudulent charges. And while data breaches are not necessarily related to lead generation, the fact is that this harmful practice magnifies the catastrophic impact a data breach would have on a borrower’s life and financial security.

Last September, the Homebuyers Privacy Protection Act (HR 7297) – which provides critical protections against these unlawful trigger leads for veterans, active duty service members, and their families – was included in this year’s National Defense Authorization Act (NDAA). For Veterans Affairs (VA) lenders across the country, 50% of borrowers are first-time homebuyers, many of whom are particularly susceptible to these harassing calls and texts. Military personnel and their families are increasingly a target for scammers, and it is critical that we protect our military men and women with the same dedication they use to serve and protect our country.

CHLA strong support the inclusion of H.R. 7297 in this year’s NDAA on behalf of the lenders, consumers, and service members financially and personally affected by the deluge of trigger leads. We applaud the bipartisan leadership of Congressmen John Rose (R-TN) and Ritchie Torres (D-NY) in introducing language to eliminate this harmful activity, and we urge the House Financial Services and House Armed Services Committees to approve this.

Scott Olson is executive director of the Community Home Lenders of America (CHLA)

Rob Zimmer is director of external affairs at Community Home Lenders of America (CHLA)

This column does not necessarily reflect the opinion of HousingWire’s editorial staff and its owners.

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