Loopholes in new law mean credit bureaus will still be able to sell applicants’ information to their current lender, servicer or bank — a boon for lenders who also service their own loans.
Legislation placing new restrictions on who credit bureaus can sell mortgage “trigger leads” to is being hailed as a win for consumers — and could also help lenders who lobbied for the bill capture more repeat business from existing customers.
The Aug. 2 Senate passage of H.R. 2808, “The Homebuyers Privacy Protection Act” means that the days when borrowers were all but guaranteed to be bombarded with competing offers after applying for a mortgage will end six months from now — with a few exceptions.
After the new law takes effect, credit bureaus will still be able to sell mortgage applicants’ information to their current mortgage lender, loan servicer, or any bank or credit union they have an account with — as long as they are making a “firm offer of credit” when they reach out.
Those loopholes mean the new rules could prove to be a boon for lenders who also service their own loans. Loan servicing — the business of collecting monthly mortgage payments from homeowners — is already a good way to get a leg up on the competition when borrowers are ready to refinance or buy their next home.
Lending giant Rocket Mortgage’s parent company is set to acquire the nation’s largest loan servicer, Mr. Cooper, with the goal of nearly doubling its market share of U.S. refinancings to 20 percent. Rocket executives say they’re able to recapture 83 percent of loan servicing clients who refinance — and think they can improve on Mr. Cooper’s 50 percent recapture rate.
Once the deal closes later this year, Rocket will be servicing about one in six U.S. mortgages — nearly 10 million homeowners.
Lenders, consumer groups aligned
Rocket Mortgage was one of several lenders that last year urged lawmakers to ban trigger leads, including AmeriHome Mortgage, Equity Prime Mortgage, Freedom Mortgage, Guild Mortgage and Union Home Mortgage.
Rocket Mortgage’s parent company, Rocket Holdings, was one of 16 organizations that registered to lobby on H.R. 2808, according to records compiled by OpenSecrets.org. Also weighing in were the Mortgage Bankers Association, the American Bankers Association, America’s Credit Unions, and the Broker Action Coalition.
The big three credit bureaus — Equifax, Experian and TransUnion — have lobbied against the bill and its predecessors.
Trigger leads have been allowed under the Fair Credit Reporting Act (FCRA) in part because lawmakers and federal regulators have concluded that more competition between mortgage lenders is good for consumers, who often don’t shop around for the best rate. A 2024 survey of consumers by ICE Mortgage Technology found 84 percent of mortgage borrowers only considered one (36 percent) or two (48 percent) lenders.
“Lenders making timely credit offers can maximize consumers’ choices when they need it most,” the Consumer Data Industry Association, a trade association that represents the credit bureaus, told Inman in 2023. “When shopping for a mortgage, this can mean saving thousands of dollars. In a time when interest rates and housing prices remain elevated, this can help people afford the right home for them.”
FCRA currently gives consumers the right to opt out of receiving pre-approved or prescreened mortgage offers. As amended by H.R. 2808, consumers will have to opt in if they want to receive firm offers of credit from a full range of mortgage lenders.
But consumer groups like the Center for Responsible Lending, Consumer Federation of America and the National Consumer Law Center joined with the lending industry in the campaign to put tighter limits on trigger leads.
“This rare alignment between industry and consumer voices sent a powerful message to lawmakers, reflecting a shared goal of protecting consumers and restoring trust in the homebuying process,” the Broker Action Coalition said in an Aug. 2 press release.
Trigger leads not going away
Rocket Mortgage’s biggest rival is United Wholesale Mortgage (UWM), which surpassed Rocket in 2022 to become the nation’s biggest mortgage lender. UWM has pulled its mortgage subservicing contract with Mr. Cooper in response to the merger deal and is moving to bring its mortgage loan servicing in-house.
“Are there going to be no more trigger leads? Not exactly,” UWM CEO Mat Ishbia told mortgage brokers who work with the company in a Facebook bulletin. Leads can still go to the borrower’s loan servicer or lender, “but just as not crazy [as before, with leads being sold to] 15 or 20 different places.”
Ishbia said he hopes the partial ban on trigger leads will mean fewer “attacks to the consumer.” Although there’s also the potential that there will be less competition for borrowers, leads will still be available.
“People think [the new trigger lead legislation] means, ‘Oh, now I’ve got a client and they’re never going to be shopped. I’m going to be set,” Ishbia said. “That’s not how this is really going to go.”
H.R. 2808’s sponsor, Tennessee Republican Rep. John Rose, amended the bill in June to add a requirement for the Comptroller General to conduct a study on the value of trigger leads received by text message within 12 months. The study will include input from state regulatory agencies, mortgage lenders, depository institutions, consumer reporting agencies and consumers.
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