Pulling the Trigger: How Trigger Leads Impact Borrowers and Lenders

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Pulling the Trigger: How Trigger Leads Impact Borrowers and Lenders

September 14, 2022
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Allie Leng-Barton

As purchases drive the current mortgage market, trigger leads are becoming more prevalent. Trigger leads are a product offered by the credit bureaus.

Some people argue that trigger leads benefit borrowers and lenders alike. Others view these services as spammy, annoying, and confusing for consumers, due to their unsolicited nature.

Below, we’ll discuss what trigger leads are and how they work. We’ll also explain how you can protect your mortgage lending business and borrower from their potential impact.

What Are Trigger Leads?

Trigger leads are leads that come from mortgage trigger products offered by the three major credit bureaus: TransUnion, Equifax, and Experian.

These products alert subscribing lenders automatically as soon as hard inquiries are discovered on borrowers’ credit reports who meet their lending criteria. To clarify, let’s take a look at an example of these services in action:

    • A borrower applies for a new mortgage or a refinance with a lender of their choice. Their lender conducts a hard credit pull during the loan origination process.
    • Once the borrower’s credit file incurs a new hard inquiry, the credit bureaus can sell the information to other lenders. Lenders with mortgage trigger subscriptions will only be alerted about this borrower if he or she meets their credit requirements.
    • Upon receiving these alerts, some lenders may start calling or emailing the borrower in an attempt to gain their business. They’re required to send a firm offer of credit.
    • The borrower has two choices. They can either stick with their original lender or accept one of the new lender’s offers.

While mortgage triggers use credit monitoring to deliver lenders new leads, they’re not the only type of product that does so. Below, we’ll discuss some other credit monitoring tools that can help you generate more leads and increase your customer retention.

Are Mortgage Trigger Leads Allowed?

Many people wonder why mortgage triggers are still permitted. After all, they’ve been the target of scrutiny in several court cases over the years. Four states have even tried to ban mortgage triggers, to no avail.[i]

The Federal Trade Commission’s (FTC) stance is that mortgage triggers are beneficial for borrowers since they provide them with more options. As such, individual states are not allowed to ban mortgage triggers.

While mortgage triggers can’t be outlawed entirely, three states (Connecticut, Kentucky, and Main) have passed laws that regulate them.[ii] In these states, lenders that use mortgage triggers must adhere to specific professional standards and ensure their credit offers comply with all relevant statutes.

Are Mortgage Triggers Formally Regulated?

Mortgage triggers are regulated by the Fair Credit Reporting Act (FCRA). If you choose to use trigger leads, you must:[iii]

    • Verify that you have a valid reason for requesting credit reports from the credit bureaus
    • Make a “firm offer of credit,” as outlined by the FCRA
    • Possess the means to honor your offer, should the borrower accept it
    • Provide written notice of the borrower’s right to opt out of solicitations

In addition to enforcing these rules, the FCRA also limits how much information lenders can receive from the credit bureaus regarding their trigger leads.

For instance, lenders can’t gain access to borrowers’ original loan applications. However, they can receive borrowers’:

    • Names
    • Addresses
    • Phone numbers (as long as they’re not listed on state or federal do-not-call lists)

The Scam Potential of Mortgage Triggers

While mortgage triggers are legal at this time, they may pave the way for illegal scams. For instance, subscribing lenders can gain access to leads using this product and misrepresent their rates or pose as members of other lending institutions. These tactics are not legal, but they still take place from time to time.

Whether you choose to use trigger leads or not, it’s important to educate your borrowers on how they work so they can address unsolicited loan offers with caution and discretion. Below, we’ll explain how you can educate your borrowers about mortgage triggers in greater detail.
Do Mortgage Triggers Benefit Borrowers?

Trigger leads can give borrowers more options, which may help them save money on their mortgages. For instance, a borrower may apply for a loan with a 6% APR. That loan application’s resulting mortgage triggers could allow this borrower to receive loan offers with APRs lower than that. In turn, this borrower could select a more affordable mortgage without having to do the hard work of applying with several lenders themselves.

While mortgage triggers have benefits in theory, in practice, this isn’t always the case. Receiving unsolicited calls and letters from lenders after filling out a loan application may come as a surprise to borrowers. If a borrower isn’t aware of mortgage triggers or how they work, they may get confused and wrongfully assume the new lenders are associated with their original loan company. Unfortunately, some subscribing lenders capitalize on this confusion.

Do Trigger Leads Benefit Lenders?

Mortgage triggers can be used by any of the following entities:

    • Banks
    • Credit unions
    • Mortgage brokers
    • Online lenders
    • Anyone else who offers mortgage services

However, trigger leads are primarily used by larger lending institutions, since they can be quite expensive. Lenders who can afford mortgage trigger subscriptions can enjoy a constant influx of new leads.

Lenders that choose to steer clear of these questionable services may view them as a threat to their hard-earned business. After attracting leads through traditional methods, losing them to mortgage trigger competitors can be frustrating and disruptive to their sales pipeline.

Trigger Leads vs. Cascade Alerts

Mortgage triggers are just one example of a credit-monitoring tool. Another is Cascade Alerts, which is an automated customer retention solution offered at Certified Credit. Both of these tools monitor consumers’ credit files to generate timely lead alerts, but that’s where their similarities end.

Cascade Alerts only monitors your past and existing clients’ credit files to find out when they may be refinancing or pursuing a new home purchase. When new mortgage inquiries hit their credit files, you can be alerted within 24 hours, giving you the heads up you need to reach out and reclaim their business in time. There’s no firm offer of credit required.

In contrast, mortgage triggers monitor vast swaths of borrowers you may have never worked with. Additionally, they always require a firm offer of credit. Thus, they’re not the same as credit-monitoring customer retention tools.

Prevent Trigger Leads From Impacting Your Business

If you’re a mortgage lender, you may be wondering how you can help protect your business from the potential negative impacts of trigger leads. After establishing a new relationship with a borrower, the last thing you want is to cause them any confusion or have their business go to a competitor. Here are some things you can do to prevent this from happening:

#1 Educate Your Borrowers

When it comes to mortgage triggers, borrower education is crucial. You may be the very first person to explain mortgage triggers to your customers.

By giving them the heads up, you can ensure they don’t fall prey to any scams or accidentally send their loan documents to the wrong lending institution. You may also be more likely to retain their business by reassuring them that you’ve given them the very best rate possible.

Most importantly, you can teach your borrowers how to opt-out of prescreened marketing altogether.

How to Opt-Out of Trigger Leads

Here are two ways to stop unwanted lender solicitation:[iv]

        • Register phone numbers on DoNotCall.gov – Consumers have a legal right to prevent unsolicited phone calls. All they have to do is register their phone numbers on DoNotCall.gov. This process only takes a minute or two. Just let your borrowers know that it can take up to 31 days for their request to be implemented.
        • Opt out from all forms of prescreened offers – Phone calls aren’t the only ways lenders can send their firm offers of credit. Many do so by mail as well. If your borrowers want to avoid all forms of spammy inquiries, they can prevent their information from being sold by the credit bureaus. They simply need to go to www.OptOutPrescreen.com, select “Opt-Out For 5 Years,” fill out the form and click confirm. After that, it can take three to five business days for the change to take effect. For this reason, you may want to prompt your borrowers to take this step five days or more before you plan to pull their hard credit reports. Online opt-out requests only remain active for five years. As a result, borrowers may need to renew their requests at various times throughout their lives.

#2 Delay Mortgage Triggers With Soft Pull Credit Reports

Another option you have is to wait to pull hard credit reports for as long as possible. This way, you can have some more time to establish a relationship with a borrower before they start receiving an influx of calls from other lenders.

During the initial stages of evaluating a borrower, you can rely on soft credit reports. Unlike hard credit inquiries, soft credit inquiries don’t trigger alerts.

Here at Certified Credit, our Cascade Prequal solution automates the process of pulling soft credit reports. You can use Cascade Prequal to weed out leads that don’t meet your basic eligibility criteria without going through the hassle and expense of pulling a tri-merge credit report and tipping off the competition.

#3 Nurture Non-Qualifying Leads With Credit Score Improvement Tools

Cascade Prequal can help you identify borrowers who have serious deal breakers. However, you shouldn’t dismiss aspiring homeowners who are on the cusp of your eligibility criteria. These leads can be nurtured into a place of better creditworthiness—you just need the right tools.

At Certified Credit, we offer several credit score improvement tools. For instance, our Wayfinder® can identify personalized steps to help your borrowers get their credit scores up to the range you require. You can also use our What-If Simulator® to forecast how various changes will affect their credit scores over the coming months.

By offering this guidance and support, you can get borrowers to the place they need to be to qualify for a mortgage with you and earn their trust and loyalty along the way. In turn, these borrowers will be much less likely to entertain other lenders’ unsolicited offers when the time comes.

Certified Credit: Safeguard Your Mortgage Lending Business From Mortgage Triggers Today

As you can see, you’re not powerless against the effects of mortgage triggers. By integrating these suggestions into your loan origination workflows, you can reduce the chances that unsolicited offers snatch away your business.

If you want to enhance your customer retention and strengthen your sales pipeline, Certified Credit has many helpful solutions. In addition to Cascade Alerts, Cascade Prequal, and our credit score improvement tools, we also offer:

  • Affordable credit reports
  • Automated verification of income and employment
  • Automated undisclosed debt monitoring
  • Property and valuation tools
  • Fraud and risk support
  • Underwriting compliance support
  • Settlement services

Want to learn more about our innovative products and services? Schedule a credit consultation with our team today.

Sources:

[i] CDIA. Mortgage Triggers Briefing Paper.

https://www.cdiaonline.org/wp-content/uploads/2018/04/Mortgage-Trigger-Briefing-Paper.pdf

[ii] CDIA. Mortgage Triggers Briefing Paper.

https://www.cdiaonline.org/wp-content/uploads/2018/04/Mortgage-Trigger-Briefing-Paper.pdf

[iii] CDIA. Mortgage Triggers Briefing Paper.

https://www.cdiaonline.org/wp-content/uploads/2018/04/Mortgage-Trigger-Briefing-Paper.pdf

[iv] FTC. Prescreened Credit and Insurance Offers.

https://consumer.ftc.gov/articles/prescreened-credit-insurance-offers