The trigger lead bill looks in doubt post-election

Mortgage trade groups recently came closer to achieving a legislative victory by curbing a longstanding practice: the abusive use of credit trigger leads. However, the outcome of recent elections has cast uncertainty on the future of this legislation.

In September, Senate Armed Services Committee Chairman Jack Reed (D-RI) and Ranking Member Roger Wicker (R-MS) included U.S. Senate Amendment 2358, also known as Homebuyers Privacy Protection Act of 2024, which addresses trigger leads, in their Senate’s Fiscal Year 2025 National Defense Authorization Act (NDAA).

The NDAA is expected to be voted on by mid-December before Congress recesses for the holidays. It incorporates several legislative measures into a single, comprehensive package. But while the NDAA has reliably passed each year since the 1960s, the inclusion of the trigger lead bill remains uncertain.

“We’ve been told congressional leadership is deciding whether to pass a version of NDAA that includes not only the trigger lead legislation, but lots of other pieces of legislation that have attached to it, or they’re going to pass a stripped-down version of the legislation with only essential things on it,” said Brendan McKay, owner of Mckay Mortgage and chief advocacy officer at the Broker Action Coalition (BAC).

Over the past two years, BAC has held more than 200 meetings on Capitol Hill advocating for this issue and has gained over 100 co-sponsors for the bill. According to McKay, if the legislation does not pass, it will likely be due to NDAA streamlining rather than an outright rejection of the trigger lead bill.

HousingWire contacted representatives in Reed and Wicker’s offices for updates on the topic, but they have not responded.

“As a system, we’ve gotten used to piling a lot of bills into one large package because the pace that would be necessary to pass individual bills is not reasonable,” said Katie Sweeney, chief executive officer at BAC.

“We’ve just been made aware that there is a conversation happening to see what direction President Trump would like to see things go into the next Congress. That said, it’s not like in his first term that he didn’t allow large packages to be pushed through Congress. We really could see things going either way. The concern is more ensuring that there is no excess that’s been thrown in.”

Changes in the Congress

Should the NDAA path falter, mortgage and consumer advocates are prepared with a backup strategy to reintroduce the bill in the next Congress. 

“We’ve got a broad coalition of consumer advocates and lending and housing groups that have coalesced to push for this. We’re absolutely still hopeful that this can be resolved and reach the President’s desk as part of the NDAA,” said Bill Killmer, senior vice president for legislative and political affairs at Mortgage Bankers Association (MBA).

“If it does not pass, we’re already talking about ways that we could have the bill reintroduced in a new Congress and trying to rebuild support for it and see if we can get it passed in the more traditional channels,” Killmer said.

He noted that the MBA has already started engaging with potential new committee leaders in both the House and Senate, with “varying levels of support” for the legislation.

The upcoming retirement of Patrick McHenry (R-NC), Chairman of the House Financial Services Committee, opens a leadership race among Republican Representatives Andy Barr of Kentucky, French Hill of Arkansas, Bill Huizenga of Michigan, and Frank Lucas of Oklahoma. On the Senate side, Sen. Tim Scott (R-SC) will lead the Senate Banking Committee, with Sen. Elizabeth Warren likely to serve as Ranking Member.

Meanwhile, at the U.S. House of Representatives, Richie Torres (D-NY) and John Rose (R-TN), who introduced the Homebuyers Privacy Protection Act in February, have been re-elected.

“We had over 100 co-sponsors; most were re-elected and would jump right back onto it. Furthermore, the fact that it got attached to NDAA is a sign of the importance and credibility and the amount of legislators that believe in the bill, which shortcuts conversations in the future,” McKay said.

BAC CEO Katie Sweeney added that there are “early rumblings” of a comprehensive data privacy package being developed for financial services. “If that happens, then trigger leads fall directly into that potential package because it all has to do with selling information without someone being aware that it’s happening.”

Changes at the Consumer Financial Protection Bureau (CFPB) could also play a role, as the agency has Fair Credit Reporting Act enforcement authority and would oversee the new trigger lead regulations. Some trade groups expect the CFPB to maintain its current stance, ensuring continuity in supporting a more limited scope to trigger leads.

“There are opportunities to make the case with the new Trump administration, from a market efficiency and a consumer protection perspective,” Killmer said. “We’ll continue to try to build support for this as a priority. Even after approval, it would take several months for implementation – we obviously urge that something like this be put in place as quickly as possible.”

What does the bill say?

Trigger leads occur when a potential borrower’s credit score is pulled for a new home loan application. Credit bureaus sell this data to other companies interested in reaching the customer.

To be clear, trigger leads are legal. Industry experts note that while the practice is not new, it has become more prominent due to technological advances, rising interest rates, and the mortgage market slowdown following the COVID-19 pandemic.

“This process was made legal in the 70s when communication was largely direct mail – if you received 10 pieces of direct mail, you could just throw them away, and it wouldn’t change the course of your day-to-day life,” Sweeney said.

“I was in the consumer-direct world, in the lead-buying space for a long time, and speed to contact is something that you measure. The objective is to be able to contact the customer within one second of that lead posting in your CRM. But the tools to be able to facilitate that have advanced so aggressively in the last five years that it’s gotten to the point where it’s just beyond confusing and deceptive.”

Customers often report receiving hundreds of calls, texts, and emails after applying for a mortgage. Currently, the industry operates on an “opt-out” basis. The new bill (Senate Amendment 2358), however, would introduce an “opt-in” model.

While some consumer advocates initially called for a “blanket ban” on trigger leads, the proposed legislation includes specific exceptions. According to Killmer, the industry compromised, opting for the “possible over the perfect” because both Republicans and Democrats showed limited support for a complete ban. 

“The industry, which danced around this for years and, in some instances, called for a blanket ban of all trigger leads, pointed towards a more efficient way to keep existing customers in contact with their lender, originator, servicer,” Killmer said.

The bill includes exceptions allowing a company to receive a lead if the consumer authorizes it, the lender originated the current loan, the lender is an insured depository institution or credit union with an active account for the consumer, or if the company services the loan.

McKay said that the ability to retain clients is crucial to the servicers’ business model, making trigger leads essential.

“If they lose the ability to protect their assets, the value of those assets will decline. When they are buying bulks of mortgages in the future, they will pay less for them, which means that it will simply trickle down the system: Lenders will get less money for selling them, they will adjust the pricing in their rate sheets, and consumers will end up having higher costs.”