Here's a problem which I don't know how to correct.

Beginning 5-6 years ago, all three of the credit agencies (Experian, Equifax and TransUnion) started selling new credit inquiries originated from mortgage lenders to other mortgage lenders. This meant that, every time I or one of my loan officers took an application and ran a tri-merge credit report, the borrower would be contacted in short order by a competing lender. We had to start instructing the borrowers to expect phone calls or lots of junk mail. And, many times the deal was lost.

In the lending business, we work hard to provide a personal, professional lending service and compete for the loan business -- either purchase transactions or refinancings. So, it seems grossly wrong that the credit agencies sell the information as a hot lead to a competitor.

I don't care how the credit agencies rationalize their actions and what they say about the borrower benefiting from competing quotes (like they didn't have any from their real estate agent). This particular practice smacks of something hugely unethical and should be illegal.

So, the question is "what can be done to stop this practice?" Does it need to be something legislated at the state level or federal? And, how long should the credit agencies be restrained from selling that information after the credit report has been pulled -- 3 months, 6 months? What's reasonable?

I don't know where to start and don't have the checkbook to influence politicians like the credit agencies so it seems like I'm just spitting into the wind.

What do you think?

This is especially troubling when you all the sudden find your borrower confused by competitive offers and see their FICO drop because of inquiries.

This article was published in the July, 2007 issue of Consumer Focus might shed some light on the subject:

Credit checks alert mortgage telemarketers

It's a surprise for many would-be home buyers: On Monday you sign a loan application with the mortgage broker of your choice and by Tuesday your phone is ringing off the hook with calls from other lenders offering you a deal. Congratulations! You've become a "trigger lead."

TELEMARKETING TARGET
These days, mortgage shoppers are telemarketing targets, thanks to "trigger leads" that credit reporting bureaus sell to lenders the instant a consumer's credit file is pulled by a loan officer, says AP writer Brian Bergstein.

Legal but perhaps not much longer
A few states have explored restrictions on the practice, and recently Minnesota's governor approved a block on most trigger leads. A ban is pending in Massachusetts.
Potential Congressional action is brewing as well. The House Financial Services Committee is investigating the issue in advance of a broad review of the credit-reporting agencies.

Triggers a recent issue
Mortgage triggers have been sold for the last few years, but have become more of an issue recently. The home-buying binge early in the decade caused an explosive growth of mortgage brokers and companies that now, in a cooling market, are redoubling efforts to win business.

QUESTIONABLE TACTICS?
Many consumers complain it's a violation of privacy. Some bankers and mortgage brokers claim borrowers are blaming them for the flood of calls. Some consumers think that trigger leads inspire deception from lenders anxious to make a deal.
William Lund, Maine Office of Consumer Credit Regulation director, believes the Fair Credit Reporting Act is being violated because:

• excessive information is provided on trigger leads

• credit offers are not firm but rather are "fishing expeditions" without benefit to the consumer

Lund also believes the National Do Not Call Registry and the pre-screening opt-out list are being ignored.

Harry Dinham, National Association of Mortgage Brokers president, is concerned about identity theft. For example, someone could say, "Look I got your information here. I have every piece except the Social Security number. Give it to me again."

WHAT TRIGGERS CREDIT BUREAU ACTIONS
Have you ever wondered?

• Why a credit card company suddenly lowers your credit line despite a sterling payment record?

• How every mortgage lender in the world is aware that you are shopping for a good refinance opportunity?

• Why your mortgage company is suddenly your new best friend?

The answer is credit "triggers," a highly profitable sideline for credit collection bureaus, according to Mortgage News Daily. Lenders, subscribed to a trigger service, are instantly notified of changes in the credit profile of current customers. These triggers may be employed as:

Collections assistance, a triggering event might be a change in a person's credit history.

A risk alert trigger indicates a customer is taking on substantial debt or exhibits a pattern of late or minimum payments on several accounts.

New Marketing opportunities, which could be disconcerting to consumers who are shopping for a mortgage loan.

Identifying solutions:
If approached about a mortgage application, Bankrate.com offers home buyers and refinancers several ways to protect themselves:

• Get the caller's name, the company and location and ask for the offer in writing.

• Call the Better Business Bureau and Department of Commerce to learn the company's record.

• Contact the state attorney general office if it's a deceptive pitch.

• Block out information by calling (888) 5-OPTOUT (678-688) or log on to www.optoutprescreen.com.

• Reduce the telemarketing calls at home by calling (888) 382-1222 or log onto www.donotcall.gov.