Avoid This Potential Scam AFTER You Get Pre-approved for a Mortgage
Mortgage Trigger Leads
There is a lesser known trend among credit bureaus and desperate mortgage lenders. Once a person has applied for a mortgage the credit bureau has a legal right to sell the name, phone number and address of the applicant to other lenders. This is called a “trigger lead” in the mortgage industry and it can be costly to many people.
When a person or a married couple applies for a mortgage loan the lender will request a credit report. This is perfectly normal. However, other mortgage brokers will contact the credit bureaus and ask to purchase the names of people that applied for a home loan within the last 30 days. These mortgage brokers then begin to bombard the new applicants with phone calls and letters claiming that they represent a particular credit bureau and have found them a great home loan with lower fees or a better APR.
It is at this point that many people fall prey to the pitch and agree to a second, or third, or even fourth application with multiple mortgage lenders. Each new application results in a new credit inquiry which drops the applicant’s score. Now, the applicant has two problems: they don’t qualify for the “better, improved” loan offered by the desperate mortgage brokers that called them AND they may not be qualified for the original pre-approval from their trusted mortgage lender.
Unfortunate Legal Aspect
As mentioned earlier, when the credit bureau sells personal information to mortgage lenders there is nothing illegal about the process. Credit bureaus also sell client information to credit card agencies and automobile lenders, but that is a topic for another discussion. In order to protect yourself from falling victim to lenders chasing “trigger leads” follow these simple steps:
- Only discuss your mortgage loan with the first lender that offered you a pre-approval for a loan. If the lender has processors make sure your loan officer introduces you to the processor either in person, by phone or by email.
- Register with the “National Do No Call Registry.” You can visit the government sponsored website https://www.donotcall.gov/ and choose the phone numbers you wish to register, including your cell number. In order for this to be most effective, register your numbers first then wait 31 days before applying for a mortgage loan. It takes that long for the registration to take effect. Also, if you have previously registered but it has been over 5 years then you need to register again.
- Register with OptOutPrescreen. This is a consumer advocate site that gives people the opportunity to have their name removed from any trigger lead list. The credit bureaus that participate are Experian, TransUnion, Innovis and Equifax. When you register your personal information will not be sold for 5 five years.
While you’re at it, why not opt out of receiving the yellow pages too: