Trigger leads, rising cost of credit reports are pain points for brokers and customers
United Wholesale Mortgage has enhanced its Safe Check program to provide greater certainty in pulling valid pricing, as well as inhibiting trigger lead solicitations.
UWM’s COO, Melinda Wilner, spoke to Mortgage Professional America about the changes to the program, which was introduced in October 2022.
Safe Check now allows loan originators to run a single or tri-merge soft credit check to prequalify their borrowers, she explained. “The first change we made was to allow the ordering of a tri-merge,” she told MPA during a telephone interview, referring to the ability to pull credit reports from all three bureaus simultaneously. “When we first rolled it out it was for one score only. In January, we expanded that to a tri-merge, which gave more access to what a borrower’s score will be.”
She said the change was made after receiving input from brokers: “It’s pretty standard now to do a tri-merge,” she said. “The sum of the three is cheaper than if you were to order all three separately, too. In true UWM fashion, we expanded it based on the feedback we heard.”
The program joins others recently launched that aim to combat what Wilner called “aggressive” tactics by the three credit bureaus for monetizing mortgage applications. In addition to selling information to lenders, the bureaus also have raised the cost of credit reports – price spikes that came as the housing market was taking a downturn, Wilner noted.
Avoiding trigger leads is the goal
The enhanced program also mitigates trigger leads. Created by the credit bureaus, triggers leads occur when borrower applies for a loan. At that point, a credit report is drawn, triggering an inquiry. Credit bureaus are then made aware the borrower is searching for a loan and have the ability to sell that information to various lenders.
“Trigger leads have become more and more of an issue,” Wilner said. “They’ve been around for a long time. I’ve been in mortgages for over 20 years. In the olden days, they would sell that trigger lead a handful of times and it was okay. I can’t think of another industry or product where somebody sells the fact I’ve applied for something to other people to solicit me.”
The problem now is the number of times a borrower’s information is sold to others by the credit bureaus, she said.
“Come to find out, the borrower now gets 60 to 80 phone calls when a mortgage credit report is pulled,” she said. “Again, a handful back then – fine. But 80 is, I don’t know, it’s harassment. I don’t think anybody should be able to do that to somebody. Nobody needs 80 options. There are times the borrower thinks there’s been a data breach. It freaks borrowers out.”
The motivation for selling so many trigger leads isn’t hard to guess, Wilner suggested. “Because they make money each time. If they sell it to five guys for $3 each, that’s $15 each. I sell it at five bucks each to 80 guys, I make $400. This is the credit agencies making money just selling these crazy leads.”
While borrowers themselves have long been able to opt out of trigger leads by contacting the credit bureaus individually, most don’t even know of the practice – let alone how to opt out, Wilner said. “I don’t think a borrower knows they should do it until it happens the first time,” she said. “It’s different than when Delta Airlines sends you an application for a credit card because they liked your credit score. It’s in the mail; you won’t have 80 credit card companies calling you.”
Safe Check opts out borrowers from trigger leads while continuing the mortgage process, she said. “Yes, I can go online and opt out of these trigger leads, but it takes five calendar days to do that,” she said.
Other programs launched to curtail brokers’ costs
Launch of the Safe Check program comes after United Wholesale Mortgage released its Control Your Price feature, which gives brokers access to 150 basis points to use when they need it. Additionally, the company unveiled a credit solution that allows independent mortgage brokers to order hard credit reports for UWM loans for a flat fee of $37.35, helping to mitigate recent significant increases in the cost of running credit reports, the company announced.
Wilner likened the rising prices of credit reports to the trigger leads practice, and speculated that both are a response to a decline in business volume.
“Unfortunately, these are companies that maybe aren’t used to the cyclicality of mortgages: ‘Hey, in 2020, 2021, things were big and I was making all this money. But now that the industry has turned, so instead I’m going to make less money – let me just triple my price before my revenue drops by two-thirds.’ I’m not a credit reporting agent, but I can only imagine that’s the ‘why’ behind it.”
Increases have been seen in other digitized products, Wilner said, pointing to the higher cost of an employment verification check as an example. “Those products have astronomically gone up in price as well. I’m talking about price increases you can never imagine. Hey, 10%, 15% a year in inflation years, I’ll give that to you; maybe 3% in normal years,” she said. “But I think prices have tripled in 12 to 16 months’ time.”
Inflation has made it harder on everybody, and brokers are no different, she said. “We went and tried to get a deal for our brokers, collectively for UWM brokers. Times are tight for everybody, and anything we can do to help to save money, that’s where we’re coming from.”
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