Group seeks amendment to the Fair Credit Reporting Act
For the better part of 30 years, the National Association of Mortgage Brokers (NAMB) has sought to end the practice of trigger leads – sales leads generated when a borrower applies for a mortgage loan that occurs when the three major credit bureaus sell data to lenders.
The process to end or at least modify the practice has been slow given the labyrinth-like path to pass legislation on the matter. But in a recent interview with Mortgage Professional America, the president of NAMB assured they haven’t given up the fight – far from it.
“We believe in competition and a fair marketplace and consumer shopping,” Valerie J. Saunders (pictured) told MPA during a recent telephone interview. “That is a key component for borrowers getting the best mortgage for themselves. However, in our opinion, that should be the choice of the consumer – it shouldn’t be thrust upon them.”
What are trigger leads?
Trigger leads are sparked when the three credit bureaus – TransUnion, Equifax and Experian – sell a potential borrower’s financial information once a credit application “triggers” a credit report pull. The credit bureaus are allowed to sell consumer data on the open marketplace without the borrower’s knowledge or approval. The appeal of the practice for the three credit bureaus is that the data identifies customers already in the market to secure mortgages – a potential gold mine of information for mortgage lenders eager to solicit their services.
The practice is perfectly legal.
“Once the consumer has made a decision and has gone so far as to authorize somebody to pull their credit – because they’ve gotten to that point whether through the prequalification process or the application process – their information shouldn’t then be sold just because we’re forced to send the consumer to the three credit reporting agencies,” Saunders said. “We’re all for competition, we’re all for shopping. It just should be done the right way. Consumers don’t need to have the choice made for them; they should make their own choice.”
Can customers opt out?
Consumers have the ability to opt out of such sales calls, but Saunders suggested that process is flawed.
“You can opt out, you can place yourself on the ‘do not call’ list and all of those things,” she said. “But the ‘do not call’ list isn’t infallible. I’m on the ‘do not call’ list and get probably 20 scam-likely calls a day. I just don’t happen to answer them. People can opt out. But if you don’t know the mechanism, the opt out process isn’t something that’s widely publicized.”
What’s more, the opting out would occur after the data had been put out there in the open which kind of defeats the purpose, she suggested. “To have to say ‘no’ when it’s already been done is too little, too late after the fact,” she said.
In combating the trigger leads practice, NAMB is calling for nothing short of an amendment to the Fair Credit Reporting Act (FCRA)– the federal law that allows the practice. Enacted in 1970, the FCRA ensures the accuracy, fairness and privacy of the information in consumer credit bureau files, according to its verbiage.
Through NAMB’s efforts, a bill was filed in 2017 that made it through the House Financial Services Committee before ultimately dying as the congressional session closed. Then, NAMB had a similar bill pushed by Rep. Ritchie Torres (D-NY) during the 2021-22 congressional session that also ultimately failed to pass.
The fight continues
“We’re now in the 118th congressional session, and in April 2023, Rep. Torres once again filed a bill and we started over again. Since then, two more trigger leads bills have been filed – one pushed by Rep. John Rose (R-TN) and another by Sen. Jack Reed (D-RI),” Saunders noted.
“So, these bills are going to morph and change over time and we’re aware of that,” she said. “We support whatever legislation occurs to mitigate trigger leads for consumers and get them the ability to control their own credit.”
But there may be more disappointment on the horizon, she suggested. “Unfortunately, neither of the House bills have gotten to a committee yet,” she said. “The Senate bill has not made it into a committee yet. And, once again, the 118th congressional session is going to end in December, and we all get to start all over again. The wheels of progress do not move quickly.”
NAMB doesn’t intend to give up the fight: “Our organization, our state affiliates, our members have been actively working trying to protect consumers’ rights for a very long time. This is an evolving process.”
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