Three weeks after a judge dismissed a lawsuit targeting Zillow and its mortgage lending program, plaintiffs’ attorneys have revived the suit and filed an amended complaint alleging that Zillow required agents to steer their homebuyer clients to Zillow Home Loans.
Plaintiffs represented by the Seattle-based law firm Hagens Berman filed a third amended complaint late Monday that removes all brokerage defendants and focuses solely on five Zillow entities.
It also adds new plaintiffs, including two who closed on homes this year.
The lawsuit generally alleged that agents who were part of the Zillow Preferred program — rebranded from Zillow Flex — steered their clients to obtain a mortgage through Zillow Home Loans, the fastest-growing source of revenue for the portal giant.
“If agents do not comply and fail to meet Zillow’s steering quotas, the agents are dropped from the Zillow Preferred program…regardless of the agent’s performance or the client’s satisfaction,” the new complaint says. “But if they do comply, they are rewarded with more leads.”
The plaintiffs allege that Zillow offers fewer loan packages than competing lenders, that its interest rates are higher than competitors’ and that it doesn’t offer assistance packages available to first-time homebuyers.
Zillow’s mortgage division grew revenue by 75 percent in the second quarter of this year compared to a year earlier, to $84 million. The division grew revenue more than twice as quickly as the next fastest-growing division of rentals.
Zillow has consistently denied the allegations, and in a statement it pointed out that it has continuously been successful in fighting the lawsuit in all of its iterations.
“This new complaint has just as little merit as the plaintiffs’ five other attempts, which have all been unsuccessful,” a Zillow spokesperson said in a statement. “A federal court dismissed every one of their claims last month, and our position hasn’t changed since then: the tools Zillow provides for buyers are free, transparent and optional. Any claims to the contrary are baseless. We will continue to defend this case with the same confidence we’ve had throughout, regardless of how many times the plaintiffs refile.”
The company has pointed out that its tools are “free, transparent and optional.”
“Nothing about plaintiffs’ latest amended complaint changes the facts, the law, or how Zillow operates. We remain confident in our position as we vigorously defend ourselves in court,” the company said.
The amended complaint alleges that Zillow began pressuring agents who obtain leads through the portal to work with its lending arm “immediately” after Zillow acquired Mortgage Lenders of America in 2018.
The complaint references an article by Capitol Forum from last fall that cited agents who said they were required to communicate with clients through Zillow or Follow Up Boss, the client management system Zillow bought in 2023.
“Agents said that through these apps Zillow records their phone calls and rates them on metrics like how quickly they start reciting a script provided by Zillow,” the complaint said. “Former Zillow Preferred agents have reported being terminated from the program because they complied with their fiduciary duties by making loan recommendations that serve their clients’ best interests, rather than steering them to ZHL, who offers a product that does not serve the clients’ best interests.”
The proposed class action lawsuit alleges that Zillow violated the Real Estate Settlement Procedures Act (RESPA) and the Washington Consumer Protection Act, and it asks for unspecified damages to be determined at trial.
