Congress Moves to Curb Trigger Leads
New legislation would prevent home buyers from being inundated with unsolicited calls, texts and emails from competing lenders offering loans.
WASHINGTON — The National Association of Realtors® consistently advocates for policies that protect home buyers throughout the mortgage process. Now, in a significant step toward stronger consumer protection, the U.S. Senate has passed the bipartisan Homebuyers Privacy Protection Act.
Introduced by Sens. Jack Reed (D-R.I.) and Bill Hagerty (R-Tenn.), the bill seeks to restrict the widespread and often abusive practice of selling mortgage credit “trigger leads.” A companion bill also passed in the House of Representatives on June 23.
NAR recently joined several organizations in a letter of support to the House Financial Services Committee, led by French Hill (R-Ark.) and Ranking Member Maxine Waters (D-Calif.).
What are trigger leads?
Trigger leads are generated when a consumer applies for a mortgage, prompting a lender to make a credit inquiry with a consumer reporting agency (CRA). This inquiry signals to the CRA that the consumer is actively seeking home financing. Under current law, CRAs are allowed to sell this information – without the consumer’s knowledge or consent – to third parties, including other lenders and data brokers.
As a result, home buyers can be inundated with unsolicited calls, texts and emails from competing lenders offering loans. Often, consumers believe an agent, broker or lender has sold their data when, in fact, they have not. This can lead to confusion and frustration at a time when consumers are making one of the most important financial decisions of their lives.
Legislative fix in progress
The practice is currently permitted under the Fair Credit Reporting Act, which allows CRAs to share consumer data with prospective creditors, provided those creditors intend to extend a “firm offer of credit.” The Homebuyers Privacy Protection Act, introduced in the House by Reps. Ritchie Torres (D-N.Y.) and John Rose (R-Tenn.), would tighten these rules.
Under this legislation, the use of trigger leads would be restricted to specific, limited scenarios, such as during an active real estate transaction, and only when the offer is a genuine firm offer of credit. If signed into law, the act would severely limit the mass sale of mortgage inquiries without the applicant’s permission.
“The National Association of Realtors strongly supports this legislation and has advocated for measures that enhance transparency, consumer control and privacy in the mortgage process,” says Shannon McGahn, NAR executive vice president and chief advocacy officer. “As the bill moves forward on Capitol Hill, NAR urges lawmakers to prioritize the privacy and protection of American home buyers.”
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