The Community Home Lenders of America (CHLA) sent a letter to U.S. Rep. John Rose (R-Tenn.) this week that applauds the introduction of a bill to ban mortgage trigger leads outside of certain situations.
The bill, House Resolution (H.R.) 4198, the “Protecting Consumers from Abusive Mortgage Leads Act,” would prohibit trigger leads for mortgages unless one of two criteria are met: either a consumer has given their permission; or “a third party has submitted documentation to such agency certifying […] a current relationship, relating to credit, servicing or other financial services.”
“CHLA applauds you for introducing legislation to enhance consumer protections with respect to so-called trigger leads,” the letter states. “We hope that your introduction of this bill will lead to more rigorous debate in Congress and among federal regulators regarding the best solution to combat abusive trigger leads when a credit report is pulled in order to obtain a mortgage loan pre-qualification or a mortgage loan.”
Trigger leads are essentially mortgage customer leads that are sold by credit bureaus to lenders. When a potential borrower gives a lender permission to pull their credit for a mortgage loan, the lender uses certain codes to identify the purpose of the hard credit pull. Those codes signal to the credit bureaus that a consumer is inquiring about a mortgage, which triggers a potential lead that the credit bureaus then sell to other lenders.
But while the CHLA applauded Rose, the letter outlines suggested amendments to a few of the bill’s provisions, including its third-party submission proposal; eligibility standards saying that “any” financial firm with a current relationship to the consumer be notified of a pulled credit report; and the ways in which a consumer would notify their lender about opting out of trigger leads.
The CHLA letter also makes suggestions for trigger lead eligibility revisions under the bill, including “making a lender that previously originated a loan for that consumer eligible to engage in loan solicitations — and removing eligibility for firms like payday lenders and for banks with non-mortgage relationships with the mortgage loan applicant.”
The bill was introduced into the U.S. House Financial Services Committee in mid-June and is awaiting debate. If the bill is favorably advanced out of committee, it can then be deliberated in the House.