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

While we can’t share their names, we can share their stories.  It’s the same one, over and over again. An individual, often for the first time, is engaging in one of the most important transactions of their lifetime: homeownership. Already intimidated by the multitude of financial requirements that come with securing a mortgage, the borrower becomes even more overwhelmed by the hundreds, sometimes thousands, of emails, calls and texts they receive from an unaffiliated third-party vendor after they pull their 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 who are in pursuit of their dream of homeownership. 

A trigger lead is a marketing product created by the national credit bureaus (Experian, TransUnion, and Equifax) and utilized when a consumer applies for a mortgage—whether it be an outright purchase or a refinance. When a borrower’s credit is pulled by the lender, a trigger is sent to the credit reporting agency to signal that an individual is interested in applying for home financing. This trigger lead is then repackaged and sold down 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, trigger leads should introduce a borrower to a better, more competitively priced product, perverse financial incentives have led to an explosion of bad-actor mortgage participants within the ecosystem. The reality is that many borrowers are hit with more than 50 ads a day via email, text and phone calls from unsolicited third parties who are looking to lure borrowers away from their current lender and make a buck on their naivety. 

The Community Home Lenders of America (CHLA) is appalled at the harm these practices have on prospective homebuyers and communities across our nation. Our IMB members have experienced the wrath, frustration, and fear from homebuyers. One home buyer was so distressed about the bombardment of solicitations and afraid of a privacy breach that they withdrew their loan application:  

 “I have decided to halt this process. Since I got approval, I have been bombarded and totally disrupted and my privacy was invaded by potential lenders. I squashed the weekend warriors, but Monday I received 47 phone calls & 10 text messages. Tuesday calmed a bit with only 15 calls, but all hell broke loose again today. I just won’t have it, and from someone that had an identity theft in 1996, when it was barely acknowledged, what I went through was horrid…Thank you for your time, but this transaction is finished.” 

The non-transparent and widespread way in which a borrower’s detailed personal information is disseminated puts homebuyers at heightened risk for identity theft and fraudulent charges. And while data breaches are not necessarily linked to trigger leads, it is a fact that this harmful practice increases the catastrophic impact a breach would have on a borrower’s life and financial security.

This past September, the Homebuyers Privacy Protection Act (HR 7297)—which provides critical protections against these abusive 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 text messages. Service members and their families are an increasingly prime target for scammers, and it is critical that we protect our military men and women with the same diligence they use to serve and protect our country. 

CHLA strongly supports the inclusion of HR 7297 in this year’s NDAA on behalf of the lenders, consumers and service members who are being financially and personally impacted by the deluge of trigger leads. We applaud the bipartisan leadership of Congressmen John Rose (R-TN) and Ritchie Torres (D-NY) on the introduction of language to remove this harmful activity, and we urge the House Financial Services and House Armed Services Committees to approve this. 

Scott Olson is the Executive Director of the Community Home Lenders of America (CHLA)

Rob Zimmer is the Director External Affairs at the Community Home Lenders of America (CHLA) 

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

To contact the editor responsible for this piece: zeb@hwmedia.com