Rhonda Porter on Seattle's Rain City Real Estate Guide points out a disturbing peice of marketing that's come accross my desk as well.
A company is offering access to consumers who've recently pulled their credit in an attempt to secure a mortgage. The information originates from the credit bureaus and the credit bureaus.
I'd say it's one thing for creditors to sell access to "grouped lists" of people who can place their credit ratings within certain specific ranges, however to sell more than generalized information like this goes beyond the pale.
How can we check the power of the big three credit bureaus? When this "opportunity" was first pitched to me as a Mortgage broker my first thought was how scary is this for a loan originator. Once you pulled your client's credit you've raised a red flag alerting your competitors to a new prospect. But also what does this mean for the consumer? If they've signed a document indicating that they understand their loan originator is not going to be sharing their information with any one else outside of this loan process, how is it that the bureau is not similarly accountable?
Are they not accountable at all? I like Rhonda's take on the subject. There's a discussion about it there, I'd go check it out.
A related phenomenon occur's in this area with lenders themselves. I don't know how many of you have experienced this on a refinance. You're working on a refinance for your client getting all your loan conditions together, you order your pay-off information and the customer is flagged, their lender calls them up an tries to sell them on a loan themselves. This practice doesn't make sense to me when a large part of a lenders business depends upon the work of a loan originator.
Isn't this a violation of the privacy laws?
This phenomenon is called a "trigger". It is supposed to give someone the opportunity of hearing about other competitive mortgage offers. What a joke.
I have had the experience of sitting down with my clients, obtaining their permission to obtain their credit report and taking the time to review the report with them. We discuss various mortgage programs available to them and then when I speak to them a week later they tell me that they have had numerous calls at all times of the day and night from loan originators telling them that they have something better for them. Luckily, the relationship that I have established is strong and my clients have stayed with McCue Mortgage Company.
The best advice is to tell people that this will happen. Ask them to call or e-mail their state and federal legislators to complain about this practice. Also, suggest that they go to www.optoutprescreen.com and register to have their names removed from the lists that are being sold. They need to enter everyone's name in their family so they will not be bothered by these other "helpful" lenders.
Philip,
I completely agree. The important step to take is in establishing a relationship with your client and demonstrating your value upfront. (these things should always be done when originating anyways right?)Then warning them so that they are prepared for the barrage.
I find these practices unacceptable and as blatant an invasion of privacy as there ever was. The bureaus should not be exempted from this. If you are disturbed by the practice I would encourage you write/call your state legistators. Even a calls from a handful of constituents can gain a lot more attention that you might think.
It is a trigger.
Example: In CA we have World Savings.
The trigger is pulling credit, World contracts with the credit bureaus that when they are mortgage holders and credit is pulled, they get notification, they then go into their database pull the phone number and Tad calls.
If the mortgage holder is ABC Lending - World doesn't care - just their own clients.
If I pull credit, and that's just pulling credit mind you, (not even ordering payoff)the client will get a phone the next day from World Headquarters. "Hi this is Tad, I was just calling to make sure you were happy with your World Savings loan... Is there anything I can help you with..."
It's called Customer Retention and it's part of every big business.
Before I hit the submit button to pull credit I make sure they understand they'll get this call.
They need to understand that the guy at the other end of the phone isn't a loan officer, doesn't know products, and can't offer them anything I cannot.
Residential / Commercial Property Specialist
Patagonia Finance
Office: 925 288-9977 xt. 104
Fax: 925 955-1640
www.PatagoniaFinance.com/mmueller
Thanks for the enlightenment
Caleb,
Thanks for the post. As a Realtor, I would not like to have the mortgage process delayed by unwanted calls to the borrower about other options. Especially if the borrower has been apprised of the various options by their lender of choice.
I know here in Oregon, the Oregon Association of Mortgage Professionals (OAMP) is fighting against this.
But, as Mike Mueller said above, as long as your client knows they're going to probably get another call from someone trying to "save their business", you should be OK.
I have a family member that is a mortgage broker. He simply tells clients that by pulling their credit, they may start getting telemarketers calls from their previous lender, or possibly another mortgage broker. He also explains the process and how he shops a loan for them, will find them the best product, and his fee structure/how he gets paid. He tells them that the telemarketer that may call is no different from him and doesn't have access to any "special" programs that he can't get them. So, by the time that conversation is over, the process is fully explained, completely transparent, and the client is 100% on board with him.
He's never lost a client by getting back solicited by the current lender, or someone who bought the lead from the credit companies.
When you go to pull the credit, DO NOT put a phone number or email address in
That's really good advice, Jeff Tomas...thanks!
I just got an email today offering to sell me "trigger leads" for like 8 bucks each. How is that legal?
The problem is a lot bigger than just your credit pull adding their name to the list...it's the fact that the credit reporting agencies and now packaging up all these "triggered" names and selling to God knows how many people.
I wish I'd saved the email...it would have made your skin crawl.
Rob K Blake
Here's the inside story folks.
THERE IS NO PRIVACY.
It is a myth. There are laws to protect privacy. That's as far as it goes. Sort of like the Fair Housing laws. That means that there will be no discrimination in housing?? Right????
The privacy protections touted by providers is a myth. Kind of reminds me of the Reduction In Paper Act by the government. Adds about 5 pieces of paper to every government event.
Now, who messed up my blog?????