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New Law Bans Abusive "Trigger Leads" in Mortgage Applications

Strategic Insights

— 1 min read

A new law has been signed into effect to prohibit the sale of personal information from credit bureaus to mortgage brokers and lenders without the consent of the consumer, also known as "trigger leads." This practice leads to a flood of unwanted calls, texts, and messages to prospective homebuyers. The Homebuyers Privacy Protection Act, co-authored by Senators Jack Reed and Bill Hagerty, aims to protect consumers' personal information and crack down on unfair and deceptive lending practices.

Key Takeaways:

  • The Homebuyers Privacy Protection Act prohibits credit reporting bureaus from selling trigger leads to mortgage brokers and lenders unless they have a deep financial relationship with the consumer.
  • The law allows trigger leads only if a consumer affirmatively opts-in to receiving them.
  • Eight states have already restricted the use of trigger leads in some fashion, and two states, Idaho and Arkansas, have recently passed trigger lead laws that will take effect in 2025.
  • The law will go into effect six months from the date of signing.
  • Cosponsors of the bill include Senators Chris Van Hollen, Tom Tillis, Catherine Cortez Masto, and 43 other Senators from both parties.
  • The bill is supported by a broad coalition of consumer advocacy groups and financial trades, including the Mortgage Bankers Association and the American Bankers Association.
  • The House version of the bill (H.R.2808) was led by Congressman John Rose and Congressman Ritchie Torres and was unanimously approved by the full House.

Statistics:

  • Up to 100+ misleading texts, phone calls, and emails can be received by prospective homebuyers within the first 24 hours of applying for a mortgage. (Source: Jim Nabors, President of the National Association of Mortgage Brokers)
  • Eight states restrict the use of trigger leads in some fashion. (Source: Office of Senator Jack Reed)

Sources:

  • Office of the Senator Jack Reed
  • Press Release: Homebuyers Privacy Protection Act Signed into Law
  • National Association of Mortgage Brokers (NAMB)
  • Mortgage Bankers Association (MBA)
  • American Bankers Association (ABA)
  • House Bill H.R.2808

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