The Consumer Financial Protection Bureau (CFPB) practices annual spring cleaning just like an ordinary household, where it tries to get rid of all the junk that’s been piling up. But instead of sweeping away heaps of dust, the CFPB is trying to do away with junk fees associated with buying a mortgage. However, the Community Home Lenders of America (CHLA), a non-profit association of small to midsize mortgage lenders, believes that regulators should add “junk calls” to that list as well.
Recently, CHLA sent a letter calling on the CFPB to focus on abuses with respect to trigger lead solicitations for mortgage loans. CHLA considers trigger lead solicitations to be “junk calls” and that they should be included in the agency’s action to combat junk fees charged by mortgage servicers as well as other illegal practices.
“Junk call trigger lead solicitations have proven to be abusive, and in some instances illegal. These practices must be rigorously investigated by federal regulators to ensure that consumers are protected throughout the homebuying process,” said Scott Olson, executive director of CHLA. “We encourage the CFPB to identify mortgage brokers or lenders that frequently engage in these impermissible solicitations and take the necessary actions to stop such practices.”
CHLA have been steadfast in their determination to ban or limit trigger lead solicitations. In the initial letter, sent November 2022, the association insisted that trigger leads do not comply with legal requirements in that they cannot provide “a firm offer of credit.”
CHLA’s most recent letter to the CFPB outlines three practices that members believe are abusive, anti-consumer, and potentially illegal.
First, CHLA stated its concern in regard to some mortgage brokers who do not have the mortgage banking capability of closing a loan, yet are making trigger lead solicitations. Therefore, CHLA and its members do not believe it's possible for a mortgage broker to meet the “firm offer of credit” requirement in such situations.
Secondly, CHLA members have been made aware of junk call trigger lead solicitations that either misrepresent or falsely imply that the individual calling is doing so on behalf of the mortgage lender the borrower is working with. CHLA constitutes that practice as unethical, anti-consumer, and potentially illegal.
Thirdly, CHLA members believe that, in some cases, individual loan officers are making trigger lead solicitations without the consent of the firm for which they work. The associations finds that to be problematic, since the employing lender is not able to properly supervise language and practices used by such loan originators.
Although CHLA acknowledges how it can be difficult for the CFPB to monitor such abusive actions, the association suggests that it use the Consumer Complaint Portal it has established to gather more information about it.
Therefore, CHLA requests that the CFPB:
- Encourage consumers to submit complaints regarding abusive trigger lead solicitations, clearly identifying what practices are not permissible.
- Identify mortgage brokers or lenders that frequently engage in impermissible actions.
- Take such actions against brokers or lenders as are appropriate to stop such practices.
