Colgate Selden is an attorney, a partner at SeldenLindeke and has over 20 years of regulatory legal experience in government and as in-house and outside counsel, and also served as a founding member of the Consumer Financial Protection Bureau (CFPB) as senior counsel in its Office of Regulations.

The potential marketing impacts

The new rule is not likely to dismantle lead aggregators or their businesses, Marx said. However, the lead generation side of the business could likely see major changes.

“I think [mortgage professionals] need to keep in mind that the lifeblood of a lot of folks businesses is buying leads from lead portals and aggregators,” Marx said. “We now have a time clock of about six months. Those portals and lead aggregators are smart and they have a lot of money, so they’re unlikely to go out of business or go away, nor are the leads that they buy. But it’s going to change pretty dramatically, we think, given consumers will now need to consent explicitly to who gets the lead that they opt into.”

If you’re a loan officer or a real estate agent buying packages of leads, for instance, some packages will change while others will go away, Marx said. Some are also likely to become more expensive, Marx explained.

Those who own lead generation portals will certainly react to the adoption of the new rules, but the rules themselves use specific terms that could challenge the ability of lead aggregators to adapt.

As for what professionals in the mortgage business can do in response to this development, Marx says it comes down to being creative. Individuals who buy leads today may need to develop their own direct lead-generation techniques.

“A lot of leads that Zillow generates in real estate, or that Bankrate or LendingTree and all the other mortgage lead aggregators generate in credit-related industries, a lot of them are paid leads coming in through paid channels,” Marx said. “The people that they reach initially are actually on Meta, Google, TikTok or other online channels and they reach the consumer with a compelling message or some content that resonates.”

It is possible — and Marx argues, could be required for either individual LOs or their companies — to perform lead generation in-house.

“They [may] have to do it,” he said. “I think they’re going to have to put these lead funnels in place, otherwise they’re not going to have the leads they need to fuel their business.”

The legal perspective

Some of the requirements that come out of these new rules may be considered onerous, but it remains to be seen if the industry side decides to litigate, said Selden.

“I think that some of the traditional models where there’s either a long form or short form inquiry [could be impacted], but some of those are already starting to be phased out or tweaked anyway because of the digital mortgage comparison-shopping advisory opinion that the [CFPB] put out for RESPA Section 8 issues,” he said.

Now, the onus will be on the lenders or aggregators themselves to seek out one-to-one consent before contacting a particular consumer identified as a lead.

“You have to give consent to a specific lender now,” he said. “So if, say, Rocket Mortgage is one of the companies involved, then when the leads that day from that particular lead generation site come in, there would have to be some way — before they can call you — for you to provide consent directly for Rocket Mortgage,” he said.

Another potential wrinkle in this scenario is if the affected companies and lead generation specialists take issue with the costs they will incur to bring their business practices in compliance with the new regulations, Selden explained.

“I’m not sure that they did a real […] analysis for the costs that this rule might have on different lead generators and mortgage lenders,” Selden said. “People may sue over this rulemaking around a lack of that consideration during the process. I haven’t heard anything yet, but that seems like that’s a possibility. We’ll see.”

Reorienting business practices to comply with the rule could touch a lot of operations these companies use, and have used for a long time.

“Given what the lead generation industry and the marketing industry will have to do to rearrange or reorder things, and review all their policies and process flows, there’s probably some substantial costs to the industry around that,” he explained. “So that could be interesting, too.”

The consumer impact

Both Marx and Selden agreed that the rule’s benefit to consumers is clear, and for Marx, this could lead to some initial pains that give way to higher quality leads. Consumer satisfaction may rise as well, Marx said.

“I don’t think this is a bad thing,” he said. “It’s going to be disruptive, but in the long haul if we have less spam coming to consumers, I feel like it really has the potential to increase trust and increase the quality of leads.”

This is because in the environment that is to come from the adoption of these new rules, consumers would now expect a call, and this could result in more success for future leads.

“In the long term for practitioners, I think this is a good thing and it’s a forcing function to get them to take control over their own business, and not outsource this really important component of it to a third party.”

Consumers will benefit from a reduction of unwanted inbound inquiries, Selden added.

“[This rule] definitely should reduce a lot of the texts and calls [consumers] get given the blanket consents that people used to ask for,” he said. “Some of the [existing] consents are so broad. Maybe you’re on a mortgage loan shopping site. You give consent for anybody to contact you, and some other industry that you weren’t even looking for may have tracked you [based on] some of your shopping habits online.”

If someone was shopping for a vacation to Disney World, Selden offered, then blanket consent may have led to Disney reaching out to them directly

“It’ll stop that magnifier effect in terms of multiple different parties contacting you,” he said. “So, the consumer benefit should be substantial.”