A trigger lead is a marketing product created by national credit bureaus. For example, once a homeowner applies for a new mortgage loan, information about the loan application is sold by Experian, TransUnion, and Equifax to participating lenders who have an interest in the fact that a consumer is actively looking for a new mortgage loan. The participating lenders use this information to start a marketing process to compete for the borrower’s business.
Trigger leads are legal and, in theory, offer a benefit to consumers: You get the best possible price on services when many providers are competing for your business. The problem is that trigger leads are often used by companies that may misrepresent themselves to trick borrowers.
How does a trigger lead work?
Responsible consumers know that carefully researching lenders and offers is key to finding the best mortgage or auto loan. Once you apply, though, all of a sudden, you might start getting calls from lenders you’ve never heard of with offers that seem too good to be true. When you fill out a loan application and give a lender permission to pull your credit report, the national credit bureaus note that you are shopping for credit. The credit bureaus then take that information, turn it into a trigger lead and sell it to competing lenders, often within 24 hours of application.
The Federal Trade Commission (FTC) has said trigger leads can help consumers discover other loans and compare costs and terms more easily.
What is the risk to divorcing homeowners?
While trigger leads are legal, there is no way for a mortgage lender who purchases trigger leads to know the underlying reason the homeowner is searching for a new mortgage loan. In a recent case, a divorcing homeowner was exploring options to refinance the existing mortgage loan on the marital home. In this situation, the divorce petition had yet to be filed, and it just so happened that the current mortgage lender of the marital home purchased the trigger lead. The mortgage lender reached out directly to the other spouse to inquire why they were looking to refinance the existing mortgage. The spouse contacted had no idea the other spouse was filing for divorce.
Can consumers prevent trigger leads?
Whether a consumer is trying to protect their personal information or streamline the process of borrowing money, there are certainly reasons to block trigger leads.
- Sign up for the National Do Not Call Registry. Lenders buying lists of trigger leads are required to scrub the list against the no-call registry.
- Register at OptOutPrescreen.com. This is the official place where people can prohibit their name from being added to lists from major credit reporting agencies that companies use to provide firm offers of credit or insurance.
In theory, trigger leads may help consumers obtain a better mortgage or auto loan offer. However, the reality is that these sales tools expose consumers to solicitors who may employ deceptive practices and almost certainly lack the knowledge to help divorcing homeowners make more informed decisions regarding their home equity solutions.
It is always important to work with an experienced mortgage professional working with divorcing clients. A Certified Divorce Lending Professional (CDLP™) can help answer questions and provide excellent advice. Please don't hesitate to reach out to me directly to provide additional information.
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