On September 5, President Trump signed into law the Homebuyers Privacy Protection Act (HPPA) (H.R. 2808). This bipartisan legislation, sponsored by Representatives John Rose (R-TN) and Ritchie Torres (D-NY), aims to safeguard homebuyers’ personal financial information.
A key concern of the HPPA is the issue of “trigger leads.” These occur when a prospective homebuyer applies for a mortgage, which subsequently triggers the sale of their personal information to other lenders without their explicit consent. Consumers may then receive marketing offers that may be confusing and may disrupt the financing process already underway with the consumers’ existing lenders.
The HPPA prohibits a consumer reporting agency (CRA) from furnishing a trigger lead unless an individual chooses to opt-in and, even then, only certain approved groups will be notified that an individual is seeking a new mortgage. According to a press release from Congressman Rose, the new law “is tailored to give consumers more control over the information they receive as part of the homebuying process and eliminates trigger lead abuses while preserving their use in appropriately limited circumstances.”
Key Provisions of the Act
The HPPA amends the Fair Credit Reporting Act (FCRA) to establish clear limitations on the sale by CRAs of consumer reports as trigger leads in connection with residential mortgage transactions. Specifically, CRAs can only provide consumer reports to third parties if (1) the transaction involves a firm offer of credit or insurance, and (2) the third party: (a) has originated the consumer’s current residential mortgage loan; (b) is the servicer of the consumer’s current residential mortgage loan; or (c) is an insured depository institution or credit union and holds a current account for the consumer.
The bill’s passage reflects strong bipartisan support, having been unanimously approved by the House Financial Services Committee and passed by voice vote in both the House and Senate.
A bipartisan group of 42 state attorneys general had previously voiced support for enactment of the HPPA and called for the enactment of the law “to end the abusive use of mortgage credit trigger leads while preserving their use in narrowly defined, consumer-consented circumstances.”
GAO Study
As part of the HPPA’s implementation, the U.S. Comptroller General is tasked with conducting a study on the value of trigger leads received by text message. This study will involve input from various stakeholders, including state regulatory agencies, mortgage lenders, and consumers, with findings to be reported to Congress within 12 months.