It’s time to put in place some safeguards and protect consumers from the sources of abusive letters

While we can’t share their names, we can be their stories. It’s the same, over and over again. A person, often for the first time, participates in one of the most important things in their life: home ownership. Already daunted by the myriad of financial requirements that come with getting a loan, the borrower is further frustrated by the hundreds, sometimes thousands, of emails, phone calls and texts they receive from an unaffiliated third-party vendor after pulling their credit score. This aggressive and often abusive sales blitz, known as a “trigger lead,” can open the door to identity theft, fraud and fraudulent lending—ultimately harming borrowers pursuing their dream of homeownership.

A trigger lead is a marketing product created by the national credit bureaus (Experian, TransUnion, and Equifax) and is used when a consumer applies for a loan—whether it’s a direct purchase or refinancing. When the borrower’s debt is deducted by the lender, a bullet is sent to a credit reporting agency to show that a person is interested in applying for a mortgage. This lead originator is repackaged and sold to a large chain of third-party sellers—completely unknown to the borrower. The data sold to these third parties includes everything from the consumer’s date of birth to the last seven digits of their social security number.

While, in theory, the trigger lead it should introduces the borrower to a better product, with a competitive price, perverse financial incentives have led to an explosion of bad actors’ loan participants within the ecosystem. The truth is that many borrowers are bombarded with more than 50 advertisements a day via email, text and phone calls from unsolicited third parties who want to lure borrowers away from their current lender and make a buck on their naivety.

Community Home Lenders of America (CHLA) is shocked at the damage these practices are having on homebuyers and communities across our country. Our IMB members have experienced anger, frustration, and fear from consumers. One home buyer was so concerned about the destruction of applications and fearing a breach of privacy that he withdrew his loan application:

“I have decided to stop this program. Since getting approved, I have been attacked and completely harassed and my privacy invaded by potential lenders. I beat the weekend heroes, but on Monday I got 47 calls and 10 texts. Tuesday was quiet with only 15 calls, but all hell broke loose again today. I won’t have it, and for someone who had his ID stolen in 1996, when it wasn’t accepted, what I went through was shocking…Thank you for your time, but this job is done.”

The non-transparent and widespread way in which a borrower’s personal information is disseminated puts home buyers at greater risk of identity theft and fraud charges. And while data breaches can be linked to lead generation, it is true that this dangerous practice increases the catastrophic impact a breach can have on a borrower’s health and financial security.

This past September, the Homebuyers Privacy Protection Act (HR 7297)—which provides important protections against these abusive motives for veterans, active duty members, and their families—was included in this year’s National Defense Authorization Act (NDAA). At Veterans Affairs (VA) lenders nationwide, 50% of borrowers are first-time home buyers—many of whom are most vulnerable to these harassing phone calls and text messages. Service members and their families are increasingly being targeted by fraudsters, and it is imperative that we protect our military men and women with the same diligence they use to serve and protect our country.

CHLA strongly supports the inclusion of HR 7297 in this year’s NDAA on behalf of lenders, consumers and service members who have been financially and personally affected by the flood of foreclosures. We applaud the joint leadership of Congressmen John Rose (R-TN) and Ritchie Torres (D-NY) for introducing language to eliminate this harmful practice, and urge the House Financial Services and Armed Services Committees to approve it.

Scott Olson is the Executive Director of Community Home Lenders of America (CHLA)

Rob Zimmer is Director of External Affairs at Community Home Lenders of America (CHLA)

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the editor responsible for this piece: [email protected]

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