Credit Bureaus “Release the Hounds” on Mortgage Applicants
The credit bureaus, Trans Union, Experian and Equifax, sell a certain kind of data called trigger data. When a borrower applies for a mortgage, a credit report is ordered for the sake of qualifying and underwriting the loan. Naturally, your credit report request is directed to the credit bureaus who notate all of the people who are having their credit pulled for the sake of getting a mortgage.
What the bureaus do with this refined data, is sell it to mortgage origination companies or middlemen in the consumer data arena. Here is a sales pitch for such data from mortgage triggers dot com.
FAQ AnswersWhere do triggers come from?
A: Trigger Leads come directly to us from the three major credit bureaus. A mortgage trigger is simply a credit bureau derived lead based on live credit attributes triggered by the actual credit behavior of your prospect. It is highly specialized and targeted for individual client.Can I specify the lead parameters?
A: Yes. You can select the FICO scores, mortgage amounts, LTV ratios, geography, and revolving debt balances that make up your ideal candidate. When they apply for a mortgage, we send you the borrower’s information within 24 hours.
How is a mortgage trigger lead generated?
A: Once you have established your ideal criteria the bureau creates a “watch” list of all homeowners that fit the exact criteria you desire. When they have a mortgage inquiry which is generated when their credit is pulled, we send you the lead.
If you have ever applied for a mortgage and wondered why you are getting scores of mortgage offers over the telephone, via mail or email, it is probably due to the credit bureaus selling your trigger data to whomever wants it (the releasing of the hounds). I don’t know about you, I’m in the mortgage origination business and I find this tactic disturbing from a consumer point of view. I also don’t like it from the origination perspective either.
I have no problem with the bureaus providing my credit information to prospective lenders. That is their function. However, it is a different story when the bureaus take note of my credit actions, such as having a credit report pulled for the sake of getting a loan, and then selling my activity as opposed to my credit history. This is why I feel this is an invasion of privacy.
Apparently I’m not the only one who doesn’t like it. Consider this snippet from a realtytimes.com article.
Home mortgage lenders themselves are angry about the new hot leads programs. Dan Hughes, a loan officer for Summit Mortgage Corp. in Edina, Minn., told Realty Times that “as a traditional loan officer who gets most of my business from referrals from Realtors and past customers, I take a dim view of anyone who buys leads from any source” — but worst of all from “overnight” data purveyors “who are feeding off my own clients’ personal information.”
Pat Barney, another Summit Mortgage loan officer, recalls recently applying for a home equity credit line from a large New York-based bank. Within a day or two, he got a call from a competing lender trying to persuade him to cancel his application with the New York bank and switch to her company. A day later, he got another call, this time from a lender who claimed that “I’ve been notified by your lender that you’re looking for a home equity line.”
Note the deception in the sales pitch. It’s not uncommon for this particular type of data. I mean what is the sales person supposed to say when the truth is the sales organization is so desperate for business that it pays to be notified whenever someone is applying for a mortgage with another company. Heck if we can’t originate loans by the virtue of our reputation and marketing savvy, we’ll try to steal the business from companies that enjoy these qualities.
This type of sales lead plays on consumer greed. After all of the preliminary hard work has been completed, the mortgage trigger lead buying companies then inundate the consumer with counter offers that are based on pure speculation. The incentive for leaving the initial company contacted is invariably a promise of a lower price. Whether it be a lower rate or closing costs or both.
While the trigger lead buying company has some credit information about you, perhaps your credit score range and amount of revolving, installment and mortgage debt you carry, the lead buying company in no way has enough information to determine you qualify for a lower rate or closing costs.
Instead the process of fact finding and providing solutions therein, need to start all over again. Your credit will need to be re-pulled, which may result in a lower score than initially pulled. However, the biggest issue is time, as the process is started all over again.
In the current lending environment, this could lead to losing a locked rate that is no longer available, possibly a lower appraised value on the home or degraded loan terms due to tightening credit requirements. All this for the promise of a rate that is reduced .25%. A promise and not a guarantee.
There is good news though. You can prevent the hounds from being released in the first place,as you have the right of “opting out” with the credit bureaus. By filling out a simple online form, you can save yourself the aggravation of being a consumer punching bag for up to five years. To be removed from opt in offers, go to OptOutPrescreen dot com. In addition to the online opt out form, you will also have the option of submitting a written request that will remove you from opt in offers permanently.
Don’t you just love the assumption that if you haven’t opted out, then you’ve opted in. Not too many businesses can get away with such tactics. If you would like to voice your opinion on trigger data, you can write the FTC or Federal Trade Commission, as they are the regulatory entity for the credit bureaus.