The mortgage industry’s effort to rein in trigger leads may have reached a standstill — at least for the time being.
In September, a trigger leads bill was added as an amendment to the National Defense Authorization Act, but some expect the federal budget bill to be scaled back. Among the items at risk of being cut is the trigger leads reform measure.
Stakeholders offer two differing explanations for why the bill may not be included.
One explanation is that Rep. Maxine Waters D-CA, ranking member of the House Financial Services Committee, supports the legislation, but Rep. Patrick McHenry R-NC, the committee chair, is hesitant.
“They both have to approve the version of the NDAA that goes to the president,” said Rob Zimmer, director of external affairs at the Community Home Lenders of America. “Our understanding today is Waters agrees to not block it, but McHenry is not convinced.”
Zimmer added, “Their view was that an opt-in is too restrictive. I don’t think I have a good grasp of their precise objection, they were very clear to us that they weren’t sold on this language…but that’s information from a month ago”
Brendan McKay, chief advocacy officer at the Brokers Action Coalition, suggested another reason for the delay: the possibility of a pared-down version of the NDAA.
“Our understanding is that congressional leadership is deciding whether to pass a slimmed down version of NDAA or with everything else trigger lead included,” said McKay. “So if it doesn’t pass, it’s not them rejecting trigger lead legislation, it’s them just peeling all this other stuff off.”
Regardless of the outcome, trade groups such as the Mortgage Bankers Association, the CHLA, and BAC are preparing to continue pushing for the bill’s passage.
A spokesman for the MBA said the trade group expects negotiations to begin in earnest now that Congress is back in session. “We remain hopeful that it will pass with the NDAA by the end of the calendar year. However, if it doesn’t, we will immediately work to have it reintroduced in the 119th Congress,” the spokesman added.
McKay echoed similar sentiments, noting that BAC is “pushing full steam ahead” and that even if it doesn’t get passed at the end of this year, “we will not be starting from scratch.”
“We can go the route of attaching it to NDAA again, or it’s very likely that there’s going to be a data privacy bill package introduced next Congress, as well as a housing package and trigger lead legislation fits into all three of those,” McKay said.
CHLA’s Zimmer said “it’s too early to handicap” the fate of the bill, but there are a lot of unknowns for what happens if it’s not included in the NDAA, partially because the political landscape is uncertain.
“If it doesn’t pass now, the bill will be reintroduced in a new Congress and we’d likely have to wait for a markup…I’m reasonably confident that the Senate committee would have a markup, but who knows?,” said Zimmer. “If things stall, we may have to look at non-legislative remedies that might involve lobbying the Consumer Financial Protection Bureau, but we don’t know who’s going to head up that agency yet.”
The original bill, the Homebuyer Privacy Protection Act, was introduced in the Senate last December by Jack Reed, D-RI, and has 43 co-sponsors from both parties, including Bill Hagerty, R-TN as the original co-sponsor. An identical piece of legislation was introduced in the House of Representatives by John Rose, R-TX as the lead sponsor and 10 original co-sponsors.
Both bills languished until an iteration was added to the omnibus military spending bill, which has become a vehicle for legislative ideas that have bipartisan support but not enough momentum to pass as standalone laws.
The current version of the bill, which may or may not be attached to the NDAA, prohibits the sharing of a credit report pulled for a mortgage loan without the consumer’s consent. It also allows the report to be shared with the current mortgage lender or servicer of an existing loan. The bill includes an exemption for banks and credit unions.
When consumers apply for mortgages, they consent to credit checks from the three major credit bureaus — Equifax, Experian, and TransUnion. These firms can then use the information to generate leads, which are sold to companies offering other lending, credit, or insurance products.
“The [trigger lead] problem has gotten to a boiling point,” said McKay. “This is something the entire industry is against and consumers are against it too.”
