Congress Moves To Limit Mortgage Trigger Leads

Almost as soon as Bryan Dyke filled out a mortgage application in mid-May, he was inundated with solicitations from lenders. “Within 15 to 20 minutes, I started getting calls,” he says.

Dyke was a victim of an unsavory type of marketing called a trigger lead. His mortgage application “triggered” a flood of text messages and phone calls from lenders, hoping to get his business. And in Dyke’s case, it wasn’t just a few friendly-but-annoying offers. “I probably got 1,000 calls in a month,” says Dyke, research director at CBS Miami.

Tales such as Dyke’s spurred Congress to crack down on the practice of hammering borrowers with marketing messages. Slightly different forms of the bipartisan Homebuyers Privacy Protection Act passed in the House and Senate as of June. Next, Congress will pick a version of the bill and send it to the president.

How trigger leads work

When Dyke applied for a home loan, his lender ran a credit check. Dyke’s name and phone number then showed up on a list that credit bureaus Equifax, Experian and TransUnion sold to other lenders.

The tactic has been around for years. But as mortgage rates shot from 3 percent in 2021 to 8 percent in 2023, the mortgage business dried up, and lenders were left fighting for scraps. This leads to today’s homebuyers, like Dyke, potentially receiving many more solicitations than those in years past.

Your phone is blowing up in all kinds of different ways. The voicemails are pretty lengthy. The texts are pretty lengthy. It’s crippling.

— Bryan Dyke

Irritating as they are, trigger leads can be helpful in small doses: Ideally, a few lenders would call, offering mortgage rates better than what a borrower has lined up. Comparing at least three loan offers can save you thousands of dollars over the life of your mortgage, according to research from Freddie Mac — but many borrowers take the first offer they get.

Shopping around grows more important the higher rates climb. However, as Dyke learned, the sheer volume of trigger leads he received didn’t let him accurately compare legitimate mortgage offers.

Constant calls from desperate lenders

Dyke says many of the calls he received touted mortgage refinancing — but he had no home loan to refinance. Dyke had sold a home in Seattle and was looking to buy in South Florida.

“They didn’t really even understand what the application was for,” he says.

While some of the lenders contacting Dyke were mistaken, Peter Idziak, a Dallas-based attorney at Polunsky Beitel Green, notes that other borrowers have received calls that were deliberately misleading.

“Some consumers … have reported that third-party callers have fraudulently implied they are calling on behalf of the lender the consumer applied to, or quoted rates and fees that the consumer would not qualify for or are not actually on offer,” Idziak says.

For Dyke, the refinance offers were a minor annoyance compared to the glut of phone calls, which came in faster than he could answer them. “I was getting calls while I was attempting to answer another call,” Dyke says. “They were leaving [a] voicemail, follow[ing] up with a text. Your phone is blowing up in all kinds of different ways. The voicemails are pretty lengthy. The texts are pretty lengthy. It’s crippling.”

Ending the abuse

Today’s rash of trigger leads encouraged Sen. Jack Reed, a Rhode Island Democrat, to co-sponsor the Senate version of the Homebuyers Privacy Protection Act.

“Getting spammed with additional offers, after a family has already shopped for a mortgage and chosen a lender, makes this already stressful process even more stressful,” Reed said when introducing the bill this year. “It can be very difficult, if not impossible, for a family to sift through dozens of offers over a few days and actually receive better credit. Consumers who are subjected to a deluge of solicitations as the result of a trigger lead are justified in feeling that their privacy has been invaded.”

The Homebuyers Privacy Protection Act would amend the Fair Credit Reporting Act to ban the use of trigger leads in ways that harass consumers. Marketers would be allowed to contact consumers only to provide a firm offer of credit and only under certain circumstances, including:

• The consumer has previously consented to solicitations.
• The company making contact either originated or services the consumer’s current mortgage.
• The marketer is a bank or credit union that already holds money for the consumer.

In the meantime, a handful of states — including Connecticut, Idaho, Rhode Island and Texas — have passed their own laws limiting the use of trigger leads. And in an interesting twist, the National Association of Mortgage Brokers and the Mortgage Bankers Association are among the trade groups supporting the legislation.

Bob Broeksmit, president and CEO of the Mortgage Bankers Association, called the bill “an enormous step toward finally putting a stop to trigger lead abuses.”