The much-anticipated Homebuyers Privacy Protection Act takes effect on March 5, affecting all originators, whether they have used trigger leads or not.

The law curbs how consumer credit data can be shared in mortgage transactions and will force originators to rethink how they find and keep borrowers.

The law does not outlaw trigger leads outright, but it sharply limits when credit reporting agencies can furnish consumer reports tied to a residential mortgage. That will result in a major shift in marketing strategy, competitive dynamics and compliance risk across the industry. Some of the new ways of doing business might actually make for stronger competitors, observers noted.

Consumers will likely see the most immediate change. The barrage of unsolicited calls that often followed a credit pull should decline. For lenders, the adjustment will be more complicated.

How the law restricts trigger lead activity

Surprisingly, the words "trigger leads" do not appear anywhere in the act, save one — in the final section, directing the Comptroller General to do a study on the value of trigger leads received by text message and report back to Congress within 12 months.

At the same time, the law does create some limits. A credit reporting agency may no longer provide a consumer report to a requesting mortgage lender in connection with a credit transaction involving a residential mortgage loan.

"While the Fair Credit Reporting Act imposes limits on when the consumer reporting agencies can provide this type of information, those limits have really not been particularly effective in protecting consumers from these often unwanted solicitations," said Joe Wilson, a senior attorney at the Bradley law firm.

While the new law amends FCRA, it doesn't declare trigger leads to be illegal, he pointed out.

For most of the clients of Polunsky Beitel Green, trigger leads had already lost most of their value, said Peter Idziak, a senior attorney at the firm.

This is because their consumers had been inundated with these marketing calls, diminishing any effective value they had, he continued.

How violations are enforced under FCRA

The act does not have any specific penalties for violations. Those will presumably fall under the general enforcement and penalty provisions of FCRA, which allows for private actions against bad actors. Aggrieved consumers can recover actual damages, costs and attorney's fees.

Additional damages can be assessed for willful violations as well as punitive damages, Wilson said.

Where exemptions create compliance risk

Carve-outs remain for lenders with an existing relationship with the borrower or explicit written authorization. But even those exemptions can be a potential compliance pitfall for lenders, said Idziak.

Purchasers must certify eligibility to receive the data, often through legal attestations. If a lender relies on a relationship that no longer exists or fails to obtain clear consent, exposure could include federal enforcement or state attorney general action, said Idziak.

"Our advice has been that if you are going to go through the opt-in route, [rather than] consent being implied or buried in fine print, it needs to be explicit, and that's sort of the big issue for the clients that are still looking to purchase trigger leads," Idziak said.

Another group to be concerned about is the plaintiff's bar, it is "another avenue they can dig into" for potential class action suits, much the same as they do for alleged violations of the Telephone Consumer Protection Act, Idziak noted.

Those who are looking to use the existing client exemption need to be certain that relationship is current, he warned. Servicing gets sold or the original loan has paid off, deposit accounts close and records might not be updated. If this is no longer the case, purchasing a trigger lead would now be a violation.

Finally, what Polunsky Beitel Green is advising clients is for the states which have their own trigger leads laws, originators must stay in compliance with those as well.

Why lenders should update privacy and marketing policies

Wilson suggests lenders update any existing policies and procedures that might touch upon leads like data privacy, even though the act's language is aimed more at the credit reporting agency.

"The act is ultimately about data privacy," Wilson said. "So I think it would be unwise to assume that there will be no liability on the part of lenders requesting this information; we just don't know yet, because we've not seen this in practice."

Originators who relied on trigger leads will have to use more advanced customer relationship management automation, more effective consumer conversion tools and create more developed referral models because purchasing those names isn't an option any more, said Matt Schwartz, a mortgage broker and co-founder of VA Loan Network, which specializes in working with veterans.

"It's been a channel with a great deal of fallout: angry customers, a potential for more complaints, a race to bottom [for] pricing," Schwarz said.

How lenders are shifting to predictive targeting

Originators that depended on purchased leads must replace them with more proactive customer engagement and stronger referral pipelines. Many are turning to predictive analytics to identify potential borrowers earlier in the process, said Bill Corbet of Blackfin Group.

"These efforts are supported by a range of vendors who are leveraging artificial intelligence — you knew that would come into the discussion — to identify potential opportunities," said Corbet. "The good vendors saw the writing on the wall for trigger leads several years ago and they have been leading their clients down the path of predicting customer needs versus reacting to an event."

Corbet did give one huge caution, which is it may not reduce the number of calls a customer gets as more lenders embrace these tools. "But it will change from 50 calls literally in minutes to 50 calls over several weeks," he said.

Whether the lenders can live off of predictive leads and will they take the time for the models to be proven and the return on investment validated is the question, which Corbet said he was skeptical about the answer.

"Of course, another solution is the Rocket-Redfin approach of integrating the initial customer touch point with the lending functions," he said.

Two other "big considerations" come from the carve outs, Corbet noted.

"This should favor the existing servicer and their retention efforts as they are already close to the customer and depositories are a big winner as they have an exemption and can receive trigger leads," he added.

How the shift affects lenders that avoided trigger leads

Lenders that avoided trigger leads will not be untouched. Many had built complex workflows to shield borrowers from aggressive marketing after a credit pull, sometimes delaying formal credit checks to maintain customer engagement.

With fewer competing solicitations expected, some of those workarounds may no longer be necessary. But the broader shift in data access and marketing strategy will still reshape how loans are originated.

The law's core aim is consumer privacy. Its lasting impact will be a recalibration of how lenders compete for borrowers in a market where data access is more constrained and relationships matter more.