Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra has made the rounds this week on Capitol Hill, providing testimony to Congress in their semi-annual reviews of the CFPB. On Thursday, Chopra took questions from members of the U.S. Senate Committee on Banking, Housing and Urban Affairs, including one on the controversial topic of mortgage trigger leads.
Sen. Jack Reed (D-R.I.), who serves as a senior member of the Banking and Housing Committee, took the opportunity to ask Chopra about the practice and what the Bureau might be able to do about it.
“Credit rating bureaus sell so-called trigger leads, which are essentially a tip that consumers shopping for a mortgage,” Reed said. “The trigger lead can generate contacts, and some of them [are] more confusing than helpful. You have responsibility for both the mortgage lending process and also the credit reporting bureaus. Is there anything you could do to help clarify the situation under existing authority to protect consumers from misinformation?”
Mortgage trigger leads
Chopra described the situation as complicated but did not challenge the senator’s premise regarding the confusion that consumers might have when trigger leads enter the equation.
“One of the things that [happens is that] a prospective homeowner will talk to a mortgage lender, and then all of a sudden, they’ll start getting a barrage of calls,” Chopra said. “And they actually think that the original mortgage lender told everyone [they were seeking a mortgage], and they wonder what’s going on. This is something that I think our authority is somewhat limited.”
Still, the Bureau is “happy” to look at potential solutions to make clear that it is not the mortgage lender openly divulging the shopping status of a particular consumer.
“That is not happening,” Chopra explained. “Because the credit reporting company is really making that information available. You know, you raise the issue of [the Fair Credit Reporting Act (FCRA)] and data on credit reports. We have a lot more of these companies collecting sensitive information, not just what loan you apply for.”
Trigger lead data can include geolocation information, Chopra said, which has privacy considerations for consumers.
“That data is increasingly being weaponized,” he said. “And so, we’re looking at all of these data issues, and figuring out how to make sure we’re protecting the public.”
Servicing rules
Democratic Sen. Jon Tester of Montana asked a focused question about what Chopra sees as the biggest risk that the CFPB can help with for the financial solvency of U.S. military veterans, and Chopra responded that homeownership issues were at the top of the list.
“Certainly, I think homeownership, being kicked out of your home, and being able to get a loan modification — by sheer dollars — it’s a huge amount of money,” Chopra said. “And that’s why we’re looking at streamlining some of our mortgage servicing rules to allow more people to more easily get loan modifications, and be able to avoid foreclosure.”
This response followed statements made by the CFPB this past summer, where it identified mortgage servicing rules as a priority.
“The CFPB observed that there were places where the rules could be revised to reduce unnecessary complexity,” Chopra said in a June blog post. “Last fall, the CFPB asked the public for input on ways to reduce risks for borrowers who experience disruptions in their ability to make mortgage payments, including input on the mortgage forbearance options available to borrowers.”
At the time, Chopra described seeking input on the features of COVID-19 forbearance programs, seeing those as a potential guide to the automation and streamlining of “long-term loss mitigation assistance,” he said.
Mortgage issues were generally not the focus of questioning, which was also the case in the House Financial Services Committee hearing Chopra sat in the day before. Much of Chopra’s opening remarks in the Senate hearing were similar, if not identical, to the same statement he provided for House lawmakers.