Time to Pull the Trigger?

Time to Pull the Trigger?










Observations from D.C.


Time to Pull the Trigger?

By Kim Curtis, President & CEO; Tidewater Home Funding, LLC.


Recent CHLA calls have revealed differences of opinion about whether and how CHLA might tee up concerns about the practice of trigger leads. Use of trigger leads is only likely to grow as mortgage rates continue to climb, with residential mortgage lenders scrapping to maintain market share in an environment where demand for mortgages is at a 22 year low. 
There seems to be a consensus that trigger leads are a problem. When a borrower applies for a mortgage and a lender requests a credit report, the borrower receives as many as 50 to 60 solicitations from various lenders. Competition is a good thing, but solicitations commonly violate the requirement that they must be a firm offer of credit, and other mortgage laws (TCC, UDAP, SAFE Act, FOC) are often broken.

It is important that the industry acknowledge and address practices which don't serve consumers well. One of the lessons of Dodd Frank is that if an industry does not self-correct consumer abuses, eventually Congress will - likely with more negative or unintended consequences than if industry had simply fixed the problem itself. So CHLA publicly raising concerns seems like a no-brainer, particularly asking the CFPB to investigate chronic abuses of the rules surrounding trigger leads. At a minimum, this could help lenders who follow the rules, reducing their disadvantage competing with lenders that don't.

Proposing a solution seems more complicated. Recent Tuesday calls have led us to focus on only suggesting changes for home purchase loans, which are more vulnerable borrowers and would address concerns about servicers who want to track and protect their existing borrower relationships. Changing from an opt-out to an opt-in seems defensible; why shouldn't the borrower make a more informed choice?

Specifics on how to implement this are more complicated, probably necessitating more work and thought, and bringing other groups and regulators to the table. But one of CHLA's strengths is stirring the debate and intensifying the public discussion on important issues. Let's at least pull the trigger on that process.

Disclaimer: The views expressed above are those of the guest commentator and do not necessarily reflect CHLA policy or perspectives.