Across the country, and indeed, even in the United States Congress, legislatures and regulators are introducing bills and rules that would seek to protect the privacy of mortgage loan applicants. It has become a normal part of applying for credit. Once a consumer makes an inquiry with any lender or broker, and have their credit pulled, they then receive numerous unsolicited contacts from other lenders and brokers seeking to also take their application. This phenomenon occurs because of a laxity in the Fair Credit Reporting Act (“FCRA”) that allows consumer reporting agencies to sell “trigger leads” or lists of consumers who appear to be seeking a new mortgage loan, based on their inquiry activity. However, adding to the number of unsolicited calls and texts a consumer already receives, it can be a process that is unwelcome by many consumers.
As a result, several states have introduced bills to protect consumers from this sharing of their personal information, namely that they have made a credit inquiry with a particular type of credit provider. Texas became the most recent state, in 2024, to pass rules trying to reduce the impact on consumers that trigger leads cause. Texas, following similar actions by other states, is imposing new requirements on lenders who contact borrowers based on a trigger lead, specifically requiring the lender indicate who they are representing, that there is no connection between them and the lender to whom they have already submitted an application, and that the communication is an attempt to solicit new business. The Texas rules also require that lenders acting on trigger leads must include a “Firm Offer of Credit” compliant with FCRA and Regulation V. Other states with similar rules include Connecticut, Kansas, Kentucky, Maine, Rhode Island, and Wisconsin.
While some states are taking what actions they can, there is little they can do to outright stop the use of trigger leads without a modification to FCRA. To that end, in the last Congress, the Senate passed Senate Bill 3502, entitled the “Homebuyers’ Privacy Protection Act” which would modify FCRA to prevent consumer reporting agencies from furnishing the lists of trigger leads to mortgage lenders and brokers. This would terminate the source of the trigger leads to mortgage lenders and brokers, preventing them from buying lists of consumers who have applied with another lender. Though Senate Bill 3502 was passed by the U.S. Senate, the bill was never passed by the House of Representatives. As a result, when the 118th Congress ended at the end of 2024, the bill’s prospects also ended. However, at the start of the 119th Congress, the same bill was introduced in the House of Representatives as House Resolution 2808 (“HR 2808”). HR 2808 has still not been passed by the House of Representative and would need to go back to the Senate before it can be sent to the president for signature and enactment as a federal law.
