CFPB Investigating Zillow – Brokers Consider RESPA

Inman News journalist Andrea Brambila broke the story on Thursday that Zillow is under investigation by the CFPB. Apparently this has been happening for two years.

According to Brambila, "The program, launched in June 2013, allows 'Premier Agents' who pay for advertising on Zillow Group's apps and websites to invite lenders to share marketing costs by paying Zillow Group to appear as 'Premier Lenders' in advertising alongside the agent."

What Should You Do?

Brokers should take immediate action. Agent activities are supposed to be supervised by the broker. We do not know who is going to become the target of the CFPB. That is the funny thing about regulators. Perhaps they find Zillow complicit, but I would expect that there is a possibility that they pursue the mortgage company and the real estate community who are also knowingly involved in the practice.

Brokers need to establish a defensible position, especially if you are a large firm. Here are a few ideas. Be sure to document your efforts in the even that you need to defend yourself against the wrath of the CFPB.

1. Send notice to your agents alerting them to the concern
2. Have office meetings to educate agents about the concern to educate agents on RESPA

3. Get a legal opinion from your counsel and share with agents
4. Request an opinion from your association of REALTORS®
5. Put a notice in your independent contractor agreement

Under no circumstances should you ask agents if they are participating in this practice. Nor should you research your agents who are marketing themselves on Zillow to see if they are co-marketing with lenders.

As a broker, your responsibility is to supervise the agent. You must clearly articulate the legal behavior for compliance with RESPA. You must react to any RESPA violation that you are aware of. Be careful.