As the trigger leads bill becomes a reality, lenders are considering whether its impact on the mortgage industry goes beyond simply cutting down consumer calls and texts.
The restrictions regarding credit reports won't go into effect until six months after Trump's signature Friday. While the
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"I expect servicing retention rates will increase as a result, which will make servicing more valuable as an asset, which in theory should mean that that's going to trickle down through the rate sheets," said Brendan McKay, owner and senior loan officer at McKay Mortgage, speaking before of the bill's passage.
McKay is also the chief advocacy officer and co-founder of the Broker Action Coalition, a prominent backer of the legislation. He was joined by numerous industry stakeholders in pushing for the bill, including a lead generation giant which could also stand to benefit from the law's enactment.
With Trump's early September signature, the market will see the changes go into effect as the spring homebuying season begins.
What the trigger leads bill will do
The Senate passed the latest version of the HPPA early last month, culminating an effort
According to
- The third party provides documentation that it has the consumer's consent;
- The third party originated the consumer's mortgage;
- The third party is the consumer's current mortgage servicer;
- The third party has a banking relationship with the consumer.
The bill's supporters include Rocket Cos., which was registered to lobby on the issue, according to OpenSecrets information
"Everybody thought something had to be done here, because consumer confusion was becoming rampant as they tried to apply for mortgages, and they were getting confused by the onslaught of calls that they were getting," he said ahead of the bill's signing.
How the bill could affect MSRs and recapture rates
Lending veterans who spoke with National Mortgage News leading up to the bill's enactment suggested the value of mortgage servicing rights could improve.
"We should expect those values to inch up a bit just based on the lower likelihood that it's going to have runoff," said Hector Amendola, president of Las Vegas-based multichannel lender Panorama Mortgage Group.
Brian Vieaux, president and chief operating officer at Finlocker, agreed with McKay's thoughts that the benefits could trickle down to borrowers.
"You might see servicers that built a really good machine around retention/recapture being more aggressive on how they price that loan in the first place to acquire more of those," he said.
Banfield, who oversees Rocket's capital markets, servicing and government affairs operations, said those servicing impacts are less clear. The company counts an over $600 billion servicing portfolio and an 83% recapture rate, and is poised to bolster those figures with its
The executive said the Rocket doesn't anticipate at this time a material impact on MSR valuations.
"The third party valuation firms have not brought it up as well," he said. "So I think the proof will come through time. We're not worried about it, but we do realize it could be a small adjustment on the margin."
How the bill could affect lead generation sites
The ban on some third party lenders could improve the value of leads on popular lead generation websites like Lendingtree. The company, which says it provides lender partners with pay-per-lead and pay-per-click leads, was another supporter of the bill, McKay said.
"Because we already prioritize permission-based sharing, a trigger lead ban would not fundamentally alter our approach," the company said in a statement. "It would simply remove some of the less consumer-friendly noise from the marketplace."
While Lendingtree declined to share how much it charges originators for its leads, one lender source said exclusive leads could cost between $80 and $150. Contracts with firms can vary, experts noted. Other popular lead generation sites including NerdWallet and Bankrate didn't respond to requests for comment.
"From our standpoint, it makes the leads worth a little bit more because they're converted with less noise," he said. "There might be some more competition for the leads as lenders look for other sources of business."
Lingering trigger lead questions
Companies that dabble more in trigger leads could flock to Lendingtree-like lead aggregators, said Vieaux. Those types of leads, he said, still take a backseat to more frequent lead sources like direct referrals from real estate agents and direct sources from the loan officers themselves.
Industry voices said questions remain around the legislation. Enforcement remains uncertain. Banfield mulled whether the Federal Housing Finance Agency, or
Donato pointed to "gray market data" the credit bureaus and data companies can aggregate via browsing history and other digital behaviors to determine if a consumer is ready to buy a mortgage, without a credit pull.
"I do think this type of lead business will continue," he said. "It's just a little less sharp. It might cost the lead buyer a little bit less. The credit bureaus might be able to monetize a little bit less. But ultimately, this type of data stream lead will continue to exist."
