I was scanning my Facebook timeline this afternoon and came upon a post by a mortgage broker I like named Patrick Queally.
WOW! Zillow news bombshell– if you're buying leads from Zillow, or are partnered with somebody who is, you may want to…
Here’s the link to the Mortgage Shots post featuring Brian Stevens from today entitled “CFPB Examiner Says Buying Leads Non-compliant“.
Here’s the video…
This is the first I’ve heard of the issue but I did some digging and came up with a post on The Real Daily from all the way back in 2014 entitled “Does Zillow’s co-marketing program violate RESPA?“.
The Zillow video confirms that an agent’s “preferred lender” IS a loan originator with whom the real estate agent already knows and works with. The premise that this is NOT a referral-based relationship is false. One of the hallmarks of RESPA Section 8 is that companies and individuals subject to RESPA are not to give or receive items of value in exchange for a referral on a federally-related loan. Zillow does a good job of explaining in the fine print that this is simply co-marketing and NOT a referral relationship.
The problem with pretending that referrals aren’t happening is that they are happening. Zillow says it’s okay if the homebuyer found the loan originator outside of the Zillow program. That would mean a loan originator would need to keep track of where and how the consumer was referred to the loan originator. Luckily 100 percent of loan originators know how the consumer was referred to them. But then how would a loan originator prove or dis-prove that a consumer who just happens to have been referred to the loan originator from that real estate agent did or did not see the ad?
Many real estate agents and loan originators already hold a false belief that the program IS compliant. And that’s too bad because this would make a great CFPB test case.
Inman News also wrote a post in 2014 entitled “Lenders said to be bending rules of Zillow’s co-marketing program“.
…who also claims the listing portal’s employees helped lenders create fake agent profiles on the site so they could receive inquiries that consumers thought they were submitting to licensed agents.
Ashley Boehler, an inside sales consultant hired by Zillow in September 2012, claims officials with the listing portal turned a blind eye to such practices, and then retaliated against him for notifying upper management about what he called a “pay for play” arrangement between lenders and real estate agents participating in Zillow’s co-marketing program.
So what’s changed since 2014? I’ll leave that up to you to surmise. Maybe the Consumer Federal Protection Bureau (CFPB) is finally getting around to that aforementioned test case?
I dislike third-party sites, especially Zillow, tremendously. Third-party sites take listings from real estate brokers, repackage those listings and then sell them back to real estate brokers. How dumb are real estate brokers?!