Florida Mortgage Marketing Methods Questioned

A former mortgage broker thought she knew what to expect when she refinanced her home loan in March - yet she was unprepared for one twist: A barrage of phone calls and e-mails from lenders offering better home loans.

Some of the callers even knew just how much money she was borrowing. Others made misleading hooks such as “We need to update your information,” or “We need to complete your mortgage application,” Adryenn Ashley recalls.

“I have privacy concerns,” she said. “My information should be confidential.”

These days, Florida mortgage seekers are major telemarketing targets, thanks in no small part to “trigger leads” that the credit reporting bureaus sell to lenders once a consumer’s credit file is pulled by a loan officer.

So when Ashley’s mortgage company checked her credit score to prepare her home loan, dozens of companies were tipped off. These alerts can be acquired for a few bucks per name if bought in bulk supply.

This is legal — though not necessarily for much longer.

A few states have been exploring many restrictions on the practice, and last week Minnesota’s governor approved a block on most trigger leads. A ban is already pending in Massachusetts.

On Web message boards frequented by Florida mortgage brokers, the act has a more colorful name:

“Snaking a deal.”

The National Association of Mortgage Brokers, whose membership includes many customers of trigger leads, officially at least isn’t a fan of them.

The association president, Harry Dinham, laments that many buyers of the alerts aren’t really in a position to make a firm offer of credit, as required by the Fair Credit Reporting Act.

Even so, Dinham and many Florida mortgage lender and broker groups think that a ban would be overkill and unnecessarily regulate the legitimate agencies.

He’d prefer to see the leads sold only on consumers who elect to put their names on trigger lists. As it stands now, leads about your interest in a mortgage can be sold unless you bother to opt out from all pre-screened credit solicitations.

Credit agencies defend the sale of trigger leads, arguing it promotes competition, which keeps Florida mortgage rates down. That stance has support at the FTC, which says consumers can benefit from the practice.

“It is absolutely false to say the first lender or mortgage broker a consumer goes to is going to have the best offer,” said Stuart Pratt, head of the Consumer Data Industry Association, the credit reporting agencies’ trade group.

Pratt also says that the credit agencies, led by the three largest groups — Experian, TransUnion and and Equifax — check their trigger leads against telemarketing Do Not Call lists.

Continue reading in the Houston Chronicle …