Zillow’s mortgage business has grown rapidly over the past few years, posting a 57% annual increase in loan origination volume, which rose to $2.3 billion, in Q3 2025. While Zillow maintains that this growth is purely organic and due to it “making it easier for more buyers to choose financing through Zillow Home Loans (ZHL),” others are not so certain.
On Friday, Araba Armstrong filed a lawsuit in U.S. District Court in Seattle claiming that Zillow used illegal kickbacks to bolster the rapid growth of its mortgage business. Araba is a first-time homebuyer from Anchorage, Alaska, who purchased a home with the help of a buyer’s agent she connected with through Zillow. She claims that she obtained a pre-approval, and eventually her mortgage from ZHL, at the direction of her agent.
The lawsuit alleges that Zillow has violated the Real Estate Settlement Procedures Act (RESPA) and the Washington Consumer Protection Act. Additionally, the lawsuit claims that Zillow aided and abetted real estate agents in breaching their fiduciary duty to consumers.
According to the complaint, Zillow pressures agents in its Premier Agent and Flex lead programs to steer buyers to Zillow Home Loans for their purchase mortgage pre-approval. Allegedly, agents who sent more clients to Zillow’s mortgage arm for their pre-approvals received extra or higher-quality leads in exchange. If agents in the Flex program fail to send a sufficient number of leads to ZHL for pre-approval, they risk being removed from the program.
Plaintiff claims buyers were steered
The plaintiff claims that buyers were steered to ZHL for their pre-approval without being informed that a large lead source for their agent depended on this.
“Zillow’s system harms consumers, who are robbed of the disinterested advice of their fiduciary real estate agent, and instead are unknowingly steered towards ZHL’s limited and often uncompetitive mortgage products,” the complaint states. “Zillow’s system ensures that agents’ financial interests are aligned with Zillow’s corporate goal of maximizing mortgage originations through ZHL, not with their clients’ best interests.”
According to the complaint, Araba was “not informed of Zillow’s quotas, incentives, or requirements linking the agent’s access to Zillow leads to referrals or pre-approvals with ZHL.”
Additionally, the complaint claims that Zillow knew that allegedly forcing Zillow Flex agents to steer clients to ZHL constituted a breach of the agents’ fiduciary duties to their clients.
“The Participating Agents’ fiduciary breaches caused consumers to incur loan costs, lose access to more favorable lending programs, and receive biased guidance from agents who appeared to act in their best interests but were influenced by Zillow’s financial incentives, undisclosed to the consumers,” the complaint states. “Despite that knowledge, Zillow knowingly and substantially assisted Participating Agents in the primary wrong of breaching their fiduciary duties.”
Seeking class-action status
The lawsuit is seeking class-action status, for a proposed class of “all persons in the U.S. who were referred to ZHL by a participating agent, and obtained a mortgage loan from ZHL in connection with the purchase of residential property.”
The plaintiff is demanding a jury trial, damages and is asking for injunctive relief preventing Zillow from continuing these allegedly unlawful practices.
Last month, The Capitol Forum published a report claiming that their research and reporting shows that Zillow’s Flex program could violate RESPA. The report detailed interviews with several agents, many of whom claimed they were Zillow Flex agents, in which they said that Zillow required Flex agents to steer homebuyers to use ZHL for their loan pre-approval.
A Zillow spokesperson clarified that there are a number of factors Zillow considers and several requirements an agent must meet to be part of the Zillow Flex program. Zillow said that this list of factors is examined when considering to reduce a number of leads an agent receives, remove them from the program or increase the number of leads they receive.
In an emailed statement to HousingWire regarding the allegations in The Capitol Forum article, a Zillow spokesperson wrote that the company is “always focused on providing the best experience possible for consumers looking to buy, sell, rent and finance,” and is guided by its “commitment to operate responsibly and in accordance with applicable laws.”
“Our approach prioritizes transparency and consumer choice, ensuring consumers receive the information and services they want and ask for at the right time throughout their real estate journey,” the spokesperson wrote. “Through our strong partnerships with real estate agents, ongoing product innovation and steadfast advocacy for consumers, we continue to set a high standard for responsible engagement across the real estate industry.”
This is not the first time Zillow has dealt with allegations of a RESPA violation related to its mortgage program. In 2023, prior to the launch of ZHL, Zillow settled a class action lawsuit related to its mortgage co-marketing program. The program was also allegedly under investigation by the Consumer Financial Protection Bureau (CFPB), but the investigation was dropped without the CFPB issuing an enforcement action.
Zillow did not immediately respond to HousingWire’s request for comment about the lawsuit.
English (US) · 