SANTA CRUZ (February 24, 2008) - If you have applied for a mortgage lately you most likely received a subsequent barrage of mortgage offerings from other mortgage lenders. It was not a coincidence because your name and some of your confidential data was sold.

The three nationwide credit bureaus, Equifax, Transunion and Experian gather, organize and store consumers’ confidential credit information for the primary purpose of providing it to participating creditors such as mortgage lenders, credit card companies, car finance companies, cell phone companies, and any other company or business that extends credit to consumers. These creditors keep track of how much you owe, what your payments are, your maximum borrowing limits, and when and how often you are late. In addition, they report any matters of public record that you may have like bankruptcies, short sales, foreclosures, judgments, etc. This information is summarized, analyzed and given a score from a low of 350 to a high of 850; it is called a credit report. Credit bureaus do not have access to consumers’ income or asset information.

Before loaning money or extending credit to a consumer, the prospective creditor will ask the consumer for written authorization to obtain his or her credit report. It is against the law to obtain a credit report without the consumer’s permission.

Creditors (mortgage lenders, credit card companies, etc.) pay credit bureaus for these credit reports and use this information to decide whether or not to extend credit to the consumer and, if so, at what rates. Consumers who have not been responsible about paying back their debts on time have lower credit scores (under, say, 680), represent higher risks to creditors and, therefore, will typically pay higher interest rates when borrowing money.

Credit scores have become more important to borrowers today than ever before. A movement of just a few points can make a significant difference in rate and fees when obtaining a mortgage. If you are planning on purchasing or refinancing a home be sure to seek counseling from a mortgage professional before you open or close or make significant purchases on your credit cards.

These credit bureaus play an important role in our economy and considering the massive amounts of data that must be digested, organized and tabulated for virtually every adult in our country who has ever had credit, they do a very good job.

However, in an attempt to maximize profits these national credit bureaus have clearly stepped out of bounds by selling customers’ private and personal data to leads-gathering companies without their permission or consent when they apply for a mortgage. These are called ‘Trigger Leads’. When a consumer selects a mortgage lender and starts the loan approval process, the lender will order a credit report. Within 24 hours of providing a credit report to the lender, the credit bureau has sold the consumers’ name, address, revolving credit balances, mortgage balances, etc. to a third party who in turn sells it to mortgage leads companies. These ‘trigger leads’ are sold to direct mail, email-spamming mortgage lenders who promptly contact the consumer to offer their mortgage options.

We have all received these obnoxious solicitations. They come by mail, phone call and email. They still are advertising seemingly unbelievable terms without providing all of the details until the borrower is signing on the bottom line. They come disguised in government-looking or Fed-Ex type envelopes or official looking emails. They may pretend to know all about you and your present mortgage. I suspect that many of our nation’s subprime woes can be traced back to consumers who succumbed to these types of solicitations. These trigger leads are surely not in the best interests of the consumer.

There is a movement for congress to put a stop to this release of a consumer’s confidential information without consent. In the meantime, consumers can ‘opt-out’ of the selling of their data by going to www.optoutprescreen.com. It takes about 5 days from the time you ‘opt out’ until the credit bureaus stop selling your personal information.

This column is written every Sunday by Peter Boutell, Certified Mortgage Planner and a principal at Santa Cruz Home Finance. You may reach him at (831) 425-1250 of email him at Peter@SantaCruzHomeFinance.com.