Bills have been introduced in the U.S. House of Representatives (H.R. 4198) and the U.S. Senate (S. 3502) to amend the Fair Credit Reporting Act (FCRA) to curtail the practice of trigger leads with mortgage loans.

The practice is controversial for both consumers and mortgage industry participants. When a mortgage lender orders a credit report on a consumer, the credit bureau providing the report may then alert various other mortgage lenders who have subscribed to a service of that fact, which is a good indication that the consumer is seeking a mortgage loan. The consumer then will receive unsolicited offers from other mortgage lenders, often prompting the consumer to complain to the mortgage lender they are working with. Of course, that mortgage lender typically advises the consumer that the last thing they would do is let their competitors know that the consumer was seeking a mortgage loan.

The House bill would amend FCRA section 604(c), which governs prescreened credit offers, to add the following:

(4) TREATMENT OF PRE-SCREENING REPORT REQUESTS.—If a person requests a report from a consumer reporting agency in connection with a credit transaction involving an extension of credit secured by real estate, such agency may not, solely on the basis of such request, furnish a report to a third party unless such third party has submitted documentation to such agency certifying that such third party has the consumer’s consent or has a current relationship, relating to credit, servicing or other financial services, with such consumer.

The Senate bill would amend the same FCRA section to add certain definitions and the following limitation:

(B) LIMITATION.—If a person requests a consumer report from a consumer reporting agency in connection with a credit transaction involving a residential mortgage loan, that agency may not, solely on the basis of that request, furnish that consumer report to another person unless that other person—

    (i) has submitted documentation to that agency certifying that such other person has, pursuant to paragraph (1), the authorization of the consumer to whom the consumer report relates; or

    (ii)(I) has originated the current residential mortgage loan of the consumer;

        (II) is the servicer of the current residential mortgage loan of the consumer; or

        (III)(aa) is an insured depository institution or insured credit union; and

            (bb) holds a current account for the consumer to whom the consumer report relates.

Although the House and Senate bills are not identical, the effort to curtail trigger leads has support from both industry participants and consumer groups, including the Mortgage Bankers Association, the National Consumer Law Center, the National Association of Mortgage Brokers, the Community Home Lenders of America, U.S. PIRG, the Association of Independent Mortgage Experts, the Broker Action Coalition, the American Bankers Association, and the Independent Community Bankers of America.

Mortgage Bankers Association President and CEO Bob Broeksmit released the following statement:

MBA and its members have led the industry in advocating for legislative reforms to stop the unwanted harassment of consumers resulting from trigger lead abuses. We commend Senators Jack Reed and Bill Hagerty for introducing the Homebuyers Privacy Protection Act to protect consumers while preserving the legitimate use of trigger leads in appropriately narrow circumstances during a real estate transaction.

We will advocate for this important bipartisan Senate bill, along with the Protecting Consumers from Abusive Mortgage Leads Act (H.R. 4198) introduced earlier this year and led in the House by Reps. John Rose (R-TN) and Ritchie Torres (D-NY), to be passed into law as soon as possible.