The Mortgage Broker Coalition Taking a Stand for Consumers

Written by:

Steve Marcinuk

Date:

05 Jun 2025

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“Credit bureaus are private, publicly traded companies on stock exchanges, and they get to sell consumer data without permission or proper disclosure. In what world should this exist?” questions Brendan McKay, Owner and Senior Loan Officer at McKay Mortgage Company and a leading voice in the Broker Action Coalition (BAC).

The question cuts to the heart of what the BAC is fighting against – practices that harm both consumers and mortgage brokers alike. As the coalition gains momentum with major industry partners and legislative victories, it’s reshaping how mortgage brokers advocate for themselves and their clients.

The Fight Against Trigger Leads

At the forefront of BAC’s advocacy efforts is legislation targeting “trigger leads,” a practice where credit bureaus sell consumer data after an originator pulls their credit during a mortgage application.

“Trigger leads are not actually the problem. They are the symptom of the problem,” McKay explains passionately. “The problem is that credit bureaus are allowed to sell consumer data without their permission.”

The practice dates back to the Fair Credit Reporting Act of 1970, when shopping for mortgages meant physically visiting multiple bank branches. “In 1970, this was a way to make it easier for consumers to see competitive offers,” McKay notes. “But that justification no longer exists. You do not have to walk from one bank branch to another to get a mortgage.”

The proposed legislation would fundamentally change how consumer data is handled, shifting from an opt-out to an opt-in model. “The credit bureaus would no longer be able to sell consumer data without permission. They would need the consumer’s permission to do so,” says McKay.

For mortgage brokers, the impact would be “overwhelmingly positive.” While some brokers do use trigger leads, the practice is more commonly employed by large call centers. The legislation would not only protect consumer privacy but also prevent the confusion that often arises when clients receive unsolicited calls after applying for a mortgage.

“Most consumers know that their broker pulled their credit, and then they started getting all these phone calls. The most logical conclusion is that their broker sold their information,” McKay explains. “It causes confusion and distrust at a time when they’ve just gone under contract and have a lot going on.”

FHA Mortgage Insurance Reform

Another significant initiative on BAC’s agenda is legislation that would allow FHA mortgage insurance to be removed during the life of the loan, similar to how private mortgage insurance (PMI) works on conventional loans.

“When you have Americans with 50% equity in their home paying mortgage insurance, which is foreclosure insurance when there’s no risk of foreclosure, that doesn’t make any sense,” McKay argues. “Coupled with the fact that FHA is sitting on seven times more money than they’re required to by congressional mandate, it’s time to give some of that money back to the American people.”

The bill, expected to be introduced by Congressman Meeks of New York, represents what McKay sees as the coalition’s responsibility not just to mortgage brokers but to homeowners who “might struggle to lobby for themselves.”

Regulatory Challenges on the Horizon

Beyond these legislative efforts, BAC is tackling several regulatory issues that create an uneven playing field for mortgage brokers:

1. FHFA’s TPO Surcharge

The Federal Housing Finance Agency currently imposes a 15 basis point surcharge through Fannie Mae and Freddie Mac on all third-party originated loans, based on claims that these loans are riskier. “We’re in the process of compiling data that shows that’s not the case,” McKay says, noting that delinquency rates are identical across channels.

2. Loan Compensation Rules

Current regulations cap broker compensation at 3%, which McKay argues creates an unequal playing field and potentially underserves certain markets. “There are parts of this country that are underserved because it makes no economic sense for brokers to operate in those areas,” he explains. “If your average loan amount is $120,000 and you’re doing manually underwritten loans, you can’t operate at 3%.”

3. APR Calculation Reform

The current method for calculating Annual Percentage Rate doesn’t factor in lender credits, creating misleading comparisons between broker and retail loans. “I can show you a brokered loan with a lower interest rate and lower lender fees, but the APR will be higher than a retail loan with a higher interest rate and higher lender costs,” McKay points out.

Industry Support Growing

The coalition’s efforts are gaining traction with major industry players. “Most recently, we announced Rocket and Freedom as partners,” McKay shares. “I think it says that wholesale lenders appreciate and value the work that we’re doing.”

This support represents a shift in industry dynamics, particularly from Rocket, which has undergone executive changes and adjusted its messaging. “Instead of talking about rivalry with one other lender, the conversation coming out of Rocket these days is investing in and improving the wholesale channel and helping brokers,” McKay observes.

“Money talks, and they’re putting their money up, and it means the world,” he adds, noting that Freedom Mortgage is similarly increasing its investment in the wholesale channel.

Market Trends: The Lock-In Effect

Beyond advocacy, McKay offers insights on current market conditions, particularly the “lock-in effect” where homeowners with low-rate mortgages are reluctant to sell and take on higher-rate loans.

While acknowledging the effect remains “incredibly real,” McKay notes some changes emerging. “You can only live on a spreadsheet for so long,” he explains. “If somebody wanted to move two years ago because they had outgrown their house, all of those reasons likely still exist.”

Family growth and practical needs eventually outweigh financial considerations for many homeowners. “If they had too many kids for their house two years ago, they might have even one more kid now. And it’s like, ‘I’ll be damned what the interest rate is going up by, we just simply need to move.'”

McKay also points to the inflation-proof aspect of fixed-rate mortgages, which may have allowed homeowners to save more for larger down payments that could offset some of the pain from higher rates.

Local Market Insights: DC Metro Area

In the Washington, DC metro area where McKay operates, unique economic factors are influencing the market. “There’s been a massive disruption to the local workforce, not only with federal employees losing their jobs, but even the remaining federal employees have a lot less job security than they did a year ago,” he explains.

This uncertainty extends beyond government workers to the region’s substantial nonprofit sector, which relies heavily on federal grants. “With all the federal grants either being pulled back or suddenly becoming shaky, you’re seeing a lot of disruption there,” McKay notes.

Despite these challenges, McKay reports that the spring market has been stronger than expected, though some buyers are putting plans on pause. Contrary to initial predictions, he hasn’t seen a surge in listings from displaced workers. “That’s not a natural reaction to losing your job when you have a family,” he explains. “You’re not just going to immediately uproot them. You’re going to hang on and try to find a new job in the area.”