Chla Urges Cfpb Action On Trigger Leads After Legislative Effort Fails

The Community Home Lenders of America (CHLA) this week sent a letter to the Consumer Financial Protection Bureau (CFPB), urging action on mortgage trigger leads after an amendment to address them was removed from a must-pass spending bill.

CHLA is effectively asking the CFPB to adopt the provisions of the amendment to the National Defense Authorization Act (NDAA) and to enforce it via the Fair Credit Reporting Act (FCRA), according to the letter that was reviewed by HousingWire.

While acknowledging that work continues to find an alternative legislative remedy, the association says that action without the support of Congress is necessary to curb the practice now.

“[CHLA] notes with extreme disappointment that Congress has stripped out language that would rein in abusive mortgage trigger leads from the [NDAA] conference report,” the letter stated. “While we understand there may be efforts to find another legislative vehicle for this provision, we believe it is time for administrative action to curb the explosion of deceptive and harassing texts, emails and phone calls that immediately follow a mortgage application.”

Mortgage industry advocates — including the Mortgage Bankers Association (MBA), CHLA and others — were encouraged by the addition in September of a separate bill to the NDAA that would have banned the practice of trigger leads. But that element, known as the Homebuyers Privacy Protection Act of 2024, was stripped from the fiscal year 2025 NDAA earlier this month. This elicited a strong response from mortgage and housing advocates.

CHLA previously urged action on this matter in a 2022 letter to CFPB Director Rohit Chopra, as noted in this week’s letter.

“CHLA first wrote the CFPB a letter over two years ago, in November 2022, highlighting abusive trigger lead solicitations — and pointing out they commonly violate the legal requirement under FCRA that they be a ‘firm offer of credit,’” the letter explained. “CHLA reiterated these concerns in a June 2024 letter to the CFPB, in which we labeled abusive trigger lead solicitations ‘junk calls.’”

Under the Fair Credit Reporting Act, a “firm offer of credit” is defined as one that “will be honored if the consumer is determined, based on information in a consumer report on the consumer, to meet the specific criteria used to select the consumer for the offer.”

Pre-screened credit card offers to consumers fall under this definition, CHLA explained, but the application and relevance to the mortgage business is more limited, it argues.

“Qualification for mortgage approvals are based on the mortgage applicant meeting numerical debt to income ratios and on the loan amount requested meeting numerical loan to value ratios,” the letter reads. “Lenders do not receive this data in the trigger lead process. Thus, CHLA does not see how a pre-screened trigger lead mortgage offer can meet the firm offer of commitment requirement unless the lender has or had a relationship with the mortgage applicant.”

By adopting the definition of a “firm offer of credit,” CFPB has the authority to ban the practice of trigger leads under its FCRA implementation authority. There could be an exception for a lender that has “originated the borrower’s existing mortgage loan or the lender has an existing relationship with the borrower,” the letter added.

In addition to Chopra, the letter was also sent to Lina Kahn, chair of the Federal Trade Commission (FTC). The time for current regulatory leaders to act is limited due to the holiday season and the impending transition of power that will likely see new leaders at these posts once Donald Trump is inaugurated as president on Jan. 20, 2025.