The key bill is in doubt after the election
Mortgage trade groups recently came close to winning a legislative victory by curbing a long-standing practice: credit trigger abuse. However, the results of the recent elections have created uncertainty about the future of this legislation.
In September, Senate Armed Services Committee Chairman Jack Reed (D-RI) and Ranking Member Roger Wicker (R-MS) introduced what is known as the Home Buyer Privacy Protection Act of 2024 and included them in the National Defense Authorization Act (NDAA). ).
The NDAA is expected to come up for a vote before Congress recesses for recess until mid-December. It combines several legislative measures into a single, comprehensive package. But while the NDAA has passed reliably every year since the 1960s, its inclusion remains uncertain.
“We have been told that the leadership of Congress is deciding whether to pass a version of the NDAA that includes not only the original piece of legislation, but many other pieces of legislation attached to it, or whether they will pass a repealed law. version of the legislation with only the essentials,” said Brendan McKay, owner Mckay Mortgage and (BAC) chief advocacy officer.
Over the past two years, BAC has held more than 200 meetings advocating for this issue on Capitol Hill and won more than 100 co-sponsors for the bill. According to McKay, if the legislation doesn't pass, it will likely be more about the NDAA's regulation than the outright rejection of the trigger-leading bill.
HousingWire reached out to representatives at Reed and Wicker's offices for updates on the matter, but they did not respond.
“As a system, we are used to bundling many bills into one big package because the speed required to pass individual bills is unreasonable,” said the BAC chief executive.
“It just became known to us that there are talks going to the next Congress to see how things go. It's not like he didn't let big packages pass Congress in his first term, he said. We could really see things going both ways. The concern is more the lack of excess thrown in.
Changes in Congress
If the NDAA derails, mortgage and consumer advocates are preparing with a backup strategy to reintroduce the bill in the next Congress.
“We have a broad coalition of consumer advocates, credit and housing groups have come together for this. We are still hopeful that it will be resolved and reach the President's desk as part of the NDAA,” said Bill Killmer, (MBA) senior vice president for legislative and policy affairs.
“If it doesn't pass, we're already talking about ways we can reintroduce the bill in the new Congress and try to rebuild support for it and see if we can get it passed through more traditional channels,” Killmer said.
He noted that MBA has already begun reaching out to potential new committee leaders in both the House and Senate, with “various levels of support” for the legislation.
The impending retirement of House Financial Services Committee Chairman Patrick McHenry (R-NC) opens up a leadership race between Republican Reps. 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 chair the Senate Banking Committee, and Sen. Elizabeth Warren will serve as Ranking Member.
Meanwhile, Richie Torres (D-NY) and John Rose (R-TN) were re-elected to introduce the Homebuyer Privacy Protection Act.
“We had more than 100 sponsors; most were re-elected and would immediately jump on him. “In addition, his inclusion in the NDAA is a sign of the importance and credibility of lawmakers who believe in a bill that cuts short conversations in the future,” McKay said.
BAC CEO Katie Sweeney added that there were “early rumblings” of a comprehensive data privacy package being developed for financial services. “If that happens, the trigger leads fall right into that lead because it's all about selling information without one being aware that it's happening.”
Changes (CFPB) may also play a role, as the agency has enforcement authority under the Fair Credit Reporting Act and will oversee the new trigger lead rules. Some trade groups expect the CFPB to maintain its current position, which provides continuity in supporting a more limited scope for triggering leaders.
“There are opportunities to argue with the new Trump administration in terms of market efficiency and consumer protection,” Killmer said. “We will try to create support for this as a priority. Even once approved, this will take several months to implement – we are clearly calling for something like this to be done as soon as possible.
What does the bill say?
A triggering potential occurs when a potential borrower's credit score is pulled for a new home loan application. Credit bureaus sell this information to other companies interested in reaching customers.
To be clear, trigger leads are legit. While the practice is not new, industry experts note, it has become more prominent due to technological advances, rising interest rates and a slowdown in the mortgage market following the COVID-19 pandemic.
“This process was legalized in the 70s when communication was direct mail — if you get 10 pieces of direct mail, you can just throw them away and it won't change the course of your daily life.” Sweeney said.
“I've been in the direct-to-consumer world for a long time, in the lead-getting space, and connection speed is something you measure. The goal is to contact the customer within a second of placing this lead in CRM. But the tools that can facilitate it have evolved so aggressively in the last five years that it's not confusing or deceptive.
Customers often report receiving hundreds of calls, texts and emails after applying for a mortgage. Currently, the industry operates on the principle of “exit”. The new bill (Senate Amendment 2358), however, would introduce an opt-in model.
Although some consumer advocates initially called for a “blanket ban” on trigger leads, the proposed legislation includes specific exceptions. According to Killmer, the industry compromised by choosing the “perfectly possible” because both Republicans and Democrats have shown limited support for a total ban.
“The industry, which has danced around this for years and in some cases called for a ban on all trigger potential, has pointed to a more efficient way to engage existing customers with their lender, originator, servicer,” Killmer said.
The bill includes exemptions that allow the company to lead if the consumer gives permission, the creditor originated the current loan, the creditor is an insured depository institution or credit union with an active account for the consumer, or the company services the loan.
McKay said the ability to retain customers is critical to the servicer's business model, and that trigger potential is important.
“If they lose the ability to protect their assets, the value of those assets will go down. When they buy mortgages in the future, they'll pay less for them, which means it'll just crash the system: Lenders will get less money to sell them, they'll have to adjust prices in their rate tables, and consumers will end up with higher costs.”
