For many years, trigger leads have been a controversial topic within the mortgage lending industry. Some proponents champion trigger leads for their potential to promote competition among lenders, helping applicants receive the very best rates. Many lenders also appreciate their lead generation benefits.
On the other hand, trigger leads can lead to a subpar borrower experience as applicants get bombarded with a slew of spammy solicitations shortly after submitting their applications. Thus, many industry professionals believe that trigger leads are more bothersome than beneficial.
The good news? Recent updates have refined trigger lead rules in the pursuit of stronger data privacy and consumer protections. Below, we’ll break down these changes and their impact on borrowers and lenders alike. We’ll also highlight a worthwhile lead generation alternative to trigger leads that doesn’t require a firm offer of credit.
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What Are Trigger Leads?
To start, let’s quickly explain what trigger leads are and how they work. Trigger leads are a service offered by the three major credit bureaus—Experian, Equifax, and TransUnion—that allows lenders to purchase mortgage applicants’ credit data, such as their names and phone numbers.
Lenders who subscribe to these services can customize their lead lists so they only contain applicants who meet their basic lending criteria. After that, they can reach out to these leads and try to win over their business from their original lenders.
All trigger lead subscribers must adhere to the Fair Credit Reporting Act (FCRA), which stipulates that they need to:
- Make a “firm offer of credit”
- Have the means to honor this offer
- Allow leads to opt out of future solicitations
How Do Trigger Leads Impact Borrowers?
In theory, trigger leads are meant to help mortgage applicants find the very best loan offers without having to submit countless applications. In reality, many mortgage applicants find these unexpected loan solicitations confusing and annoying. After all, trigger leads are often sold in bulk, inundating applicants with unrelenting amounts of solicitation.
What’s more, many mortgage applicants aren’t aware of trigger leads. If their lender doesn’t warn them in advance, they may:
- Blame their lender – Some mortgage applicants assume their lender sold their information to third parties, as opposed to the credit bureaus, chipping away at their trust and debasing their borrower experience.
- Confuse solicitors with members of their original lending institution – Applicants may assume solicitation calls are from their original lender or underwriter, rather than a competitor. Not only can this be confusing, but it can also disrupt their lending process.
- Fall prey to fraud – In worst-case scenarios, illegal actors may leverage trigger leads to steal mortgage applicants’ personal information by posing as their original lender or underwriter. As of now, there’s no centralized organization for consumers to submit trigger lead-related complaints.
As you can see, trigger leads have many downsides for mortgage applicants.
How Do Trigger Leads Impact Lenders?
For lenders, trigger leads are a mixed bag. Some lenders use trigger leads to amplify their lead generation. However, these same lenders can lose just as much business as they gain to other lenders employing the same approach.
How Are Trigger Leads Changing in 2024?
Trigger leads have been an ongoing topic of conversation among industry professionals. Many industry associations, from the Mortgage Bankers Association to the National Association of Mortgage Brokers, have advocated for trigger lead reform.
In terms of legislation, several bills have been introduced that ban or restrict the use of trigger leads. Some examples include:
Homebuyers’ Privacy Protection Act (S.3502)
The proposed Homebuyers Privacy Protection Act seeks to modify the Fair Credit Reporting Act, barring credit reporting agencies from selling trigger leads when individuals apply for residential mortgage loans unless the consumer has expressly consented to the generation and sale of such leads. Exceptions would apply in cases where the recipient of the trigger lead has originated the consumer’s existing mortgage, services their current mortgage, or is an insured depository institution holding a current account for the consumer.
Trigger Lead Abatement Act of 2023 (H.R. 2656)
In April 2023, the Trigger Leads Abatement Act of 2023 was proposed. This legislation prevents credit reporting agencies from providing a credit report that hasn’t been requested by a consumer, specifically when the report is being supplied due to a credit inquiry related to a home mortgage loan. This directly impacts trigger leads, as this process alerts other mortgage lenders to the fact that the consumer is actively seeking a mortgage loan.
Protecting Consumers from Abusive Mortgage Leads Act (H.R. 4198)
The Protecting Consumers from Abusive Mortgage Leads Act aims to restrict the use of trigger leads for mortgages, allowing such leads only under two conditions: either the consumer has provided explicit consent, or a third party has submitted documentation to the relevant agency certifying an existing relationship, pertaining to credit, servicing, or other financial services.
Although these bills have yet to be passed, each of them poses potential impacts on trigger lead practices.
The Federal Communications Commission (FCC)’s Latest Ruling
In addition to the bills listed above, the FCC has announced a new ruling on December 13, 2023 that will effectively close the “lead generator loophole,” which has enabled lead aggregators to sell lists of leads to large swaths of lenders at once. This announcement states that:
The new rules make it unequivocally clear that comparison shopping websites and lead generators must obtain consumer consent to receive robocalls and robotexts one seller at a time – rather than have a single consent apply to multiple telemarketers at once.
In other words, comparison shopping websites must obtain explicit consent from potential leads one lender at a time. Additionally, the new rules allow the FCC to “red flag” phone numbers, have mobile carriers block their texts, and provide text messages with the same Do-Not-Call list protections as phone calls.
This update is expected to take place in the summer of 2024, at which point lenders and other businesses will need to ensure their compliance.
How Will These Updates Impact Borrowers and Lenders?
By closing the lead generator loophole, the FCC’s proposed rule will have the following effects:
- Mortgage applicants will no longer be bombarded with solicitations – Trigger leads have often overwhelmed mortgage applicants with unwanted calls from solicitors. By mitigating this influx of solicitations, the FCC’s trigger lead update can improve the borrower experience.
- Lenders will receive higher quality leads – Requiring consumers to provide one-to-one consent will reduce the number of leads that lenders receive. However, this has a silver lining—leads who actively opt in for marketing outreach are much more likely to listen to lenders’ pitches with an open mind than those who are contacted without their consent.
- Lenders will need to update their compliance – If you want to continue using trigger leads, you’ll need to make sure you obtain one-to-one consent before contacting new leads. Bringing your business into compliance may come with some upfront costs as you rework your workflows.
Lenders will need to leverage in-house lead generation alternatives – If you’ve historically relied on trigger leads to populate your sales pipeline, you may need to explore other methods once this ruling takes effect.
One worthwhile credit monitoring alternative is Cascade Alerts. This affordable solution continuously monitors your existing client database for in-the-market leads, enabling you to find out exactly when your past and present clients are shopping for new mortgages. Cascade Alerts shares these alerts within 24 hours. You can customize your lead lists according to your qualification criteria. Thus, like trigger leads, Cascade Alerts delivers timely lists of qualified leads. However, unlike trigger leads, there’s no firm offer of credit required.
In addition to using Cascade Alerts, you can attract brand new leads by creating compelling online content, such as YouTube videos, TikTok reels, blog posts, and podcasts. As you share educational content across social media, you can encourage prospective leads to reach out to learn more about your mortgage lending services.
How To Help Your Borrowers Opt Out of Trigger Leads
While you’re waiting for the new trigger lead rules to take hold, it’s still important to educate your borrowers on trigger leads. You can also encourage them to opt out of trigger leads by:
- Registering with Opt Out Prescreen – On OptOutPrescreen.com, borrowers can prevent the credit bureaus from selling their data and opt out of trigger leads for five years. This service is free, though it can take several days to take effect.
- Adding their phone number to the Do Not Call Registry – On DoNotCall.gov, borrowers can opt out of solicitation calls for free. It only takes 24 hours for new solicitors to stop calling, though borrowers may receive calls from solicitors who obtained their information in the past for up to 31 days.
- Signing up with DMAchoice.com – On DMAchoice.com, borrowers can pause loan offer solicitations and other promotional mail offers from being sent to their physical mailbox for ten years. This service has a $5 fee for online registration and a $6 for mail-in registration.
Along with suggesting these solutions, you can take matters into your own hands by using soft pull credit reports during the early stages of your lending process. Unlike hard pulls, soft pulls won’t initiate trigger leads, so you can qualify your applicants discreetly.
Once you’ve evaluated an applicant’s creditworthiness, you can earn their enduring loyalty with the help of ScoreNavigator’s credit score improvement tools. These solutions offer customized tips for improving applicants’ credit scores.
For example, ScoreNavigator’s Mortgage Action Plan (MAP) can generate customized score improvement plans based on your applicants’ credit reports and financial behavior. ScoreNavigator also offers several innovative simulators, which can identify:
- The most effective steps your applicants can take to achieve specific credit scores.
- Which creditors your applicant should pay first to maximize their credit scores.
- The current point deductions of each of their various tradelines.
- How different credit decisions may increase or decrease their credit scores.
- The best day of the month to pull applicants’ credit reports to help them qualify for more favorable terms.
By providing this personalized service before you initiate applicants’ hard pulls, they’ll be less likely to consider competitors’ offers when they arise.
Supercharge Your Lead Generation With Certified Credit
To sum it up, the proposed legislation and the FCC’s new ruling may prevent borrowers from receiving a slew of solicitation calls upon submitting their formal applications. Better yet it may help more mortgage lenders hold onto their hard-earned business.
However, these changes will also put the onus on lenders to get more creative with their lead-generation efforts. If you want to gain the benefits of trigger leads without the burdens, consider adding Cascade Alerts to your lending toolbox.
Along with this innovative solution, we also offer the following products and services at Certified Credit:
- Affordable credit reports
- Automated prequalification
- Automated undisclosed debt monitoring
- Automated verification of income and employment
- Automated credit supplements
- Property and valuation support
- Fraud and risk mitigation
- Flood zone determinations
- Underwriting compliance
- Settlement services
Ready to future-proof your mortgage lending business for 2024 and beyond? Schedule a credit consultation with the Certified Credit team today.
