A long-awaited crackdown on trigger leads is on its way to President Donald Trump’s desk, but not everyone in the mortgage world is celebrating. Nestled in the bill is a provision that’s leading professionals to raise doubts about whether the measure is a consumer safeguard or a competition killer.
“The act will require consumers to opt-in to receive these trigger leads or have an existing relationship with the entity requesting the information,” reads a summary of the bill written by Independent Community Bankers of America (ICBA).
An industry CEO who asked not to be named told HousingWire that the opt-in language in the bill is “meaningless.”
“Consumers already get buried in fine print and disclosures they do not read or understand. Asking them to opt in just gives retail lenders another way to box out competition. They will bury that opt-in inside their applications and sales process and lock the borrower into their ecosystem before the borrower even realizes it.”
Another source who is involved in the industry’s policy side expressed concerns about the opt-in button’s potential to be “abused,” since consumers are used to agreeing to most internet pop-ups, such as buttons to “allow cookies.”
“Ultimately, that’ll have to be litigated,” the policy expert said. “But I think that with the way it’s written, with that opt-in, you’re going to see folks abusing it and violating the spirit of the law most likely. And I wouldn’t be surprised if we’re still talking about trigger leads and a need for a legislative fix in two, three or four years from now.”
The CEO source described the opt-in provision as a “gift” to retail lenders.
“Independent brokers do not have a billion-dollar marketing machine to trick people into opting in. Consumers will end up funneled right back to retail, where they pay more and have fewer options.”
As a result, the source said that the trigger leads bill “locks in” control for retail mortgage lenders.
“They already keep 70% to 80% of their past clients. Take away trigger leads, and you hand them even more market power. … This is not about protecting consumers. It is about protecting the retail giants from competition.”
Brendan McKay, owner of McKay Mortgage and chief advocacy officer for the Broker Action Coalition (BAC), admits that not enough is known about the opt-in provision or how it will be regulated.
Who wins?
The social media buzz of the trigger leads argument is contributing to the concerns among lenders and loan officers. McKay finds that it’s common for industry talking heads to post “hot takes” about trigger leads to get noticed.
Several industry figures have taken to social media to call the bill a win for the consumer.
“Anything to slow that barrage of calls that people get once they start the process should make people more willing to dip their toes into the water. … This is unabashedly positive,” a source told HousingWire.
“I think this is a win for everybody,” said Dan Sogorka, general manager for Rocket Pro. “I don’t think this is a death knell for any particular group of brokers. I think a small percentage of brokers who maybe have only done trigger leads will have to adjust a little bit.”
But opposing arguments have also arisen on LinkedIn.
“The consumer choice already existed,” said Patrick Neely, a former LO and real estate broker as well as the founder and CEO of HomeSifter. He does not see the legislation as a victory for consumers.
“Does that borrower know where to get a better rate? The calls were noisy, but they could have been reformed into structured competition, [which is] a missed opportunity.”
Neely wrote separate letters to the Office of Inspector General and the Department of Justice that cited the “anticompetitive risks and regulatory capture concerns” he has with the bill.
“Instead of eliminating the mechanism, policymakers could have reshaped it into a transparent, borrower-controlled opt-in that preserved competition,” he told HousingWire.
McKay disagrees. “I think the overwhelming majority of the industry collectively agrees is a great thing. … The argument that we should have the ability to sell consumers’ data without their permission because we know what’s best for them is a very arrogant one.”
Sogorka also disagrees and shared his experience dealing with trigger leads.
“Having done many refinances and home purchases over the years, I wouldn’t be happy to have signed all my paperwork feeling good about where we’re going, and then get 100 random calls,” he said.
“To give you an example, I got three voicemails today on a home equity loan I applied for a year and a half ago. Somehow, I’m still reverberating around some trigger lead system where I’ve gotten thousands of calls over the past, and that is not beneficial to me in the least.”
The one area of agreement among sources is that after consumers, mortgage servicers will benefit the most. “This bill will result in total volume declining, but those companies with large servicing portfolios or existing relationships will be able to defend those,” one source said.
“You’ll see servicing retention rates increase,” McKay added. “Servicers will win as well, but when servicers win, everyone kind of wins.”
A world without trigger leads
The farewell to trigger leads means that brokers and lenders that used the leads have to pivot and develop a new lead generation strategy. Sogorka said he imagines this will be easy for brokers who have “mastered” relationship building and have a strong referral network.
“Everyone uses trigger leads, but they are the best weapon brokers have against the big retail lenders,” a source told HousingWire. “Those companies already flood the airwaves with ads and have massive retention armies that keep their past clients locked in. Trigger leads are the one way we can break through that wall and give borrowers a real choice.”
The same source said that leads cost around 10 to 20 cents a pop.
“The real cost is the work brokers put in to compete with billion-dollar call centers,” they said. “Retail tries to spin this as consumer protection, but the reality is, trigger leads are inexpensive and they create competition.”
At the end of the day, sources said the “biggest losers” are credit unions, which were profiting from selling leads.
Craig Ungaro, chief operating officer and chief of staff at AnnieMac Home Mortgage, is of the opinion that call centers will simply move on to the next best option.
“I think that other lead types are going to get more expensive. So if the trigger leads are eliminated, call centers are going to go into different areas or different types of leads, and obviously, if you have more demand on that with less supply, the price is going to go up,” Ungaro said.
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