Zillow hit with class action over alleged mortgage steering scheme

Zillow

10/11/2025 16:20

By Mike Scarcella

Nov 10 (Reuters) - Online real estate platform Zillow ZG.O is facing a new consumer lawsuit in federal court in Seattle that accuses the company of pressuring homebuyers into using its mortgage lending division.

The proposed class action, filed on Friday, claims Zillow operates programs in which its affiliated real estate agents receive high-value sales leads only if they meet internal quotas for securing pre-approved mortgages from Zillow Home Loans.

Agents who failed to meet Zillow's targets got fewer leads or were cut off, according to the lawsuit.

The plaintiff, an Alaska homebuyer, said she was led to believe she was required to use Zillow Home Loans and was not informed of alternative, potentially more affordable financing options. She sued on behalf of herself and as many as thousands of other consumers who allegedly paid more for mortgage credit and were denied access to competing loan options and better terms.

“Zillow is fundamentally cheating a carefully regulated system in order to win more of the mortgage financing market, and the result is that home buyers do not get objective, clear-eyed advice from their trusted real estate agents,” the lawsuit said.

The complaint alleges Zillow’s practices violate the federal Real Estate Settlement Procedures Act and Washington state consumer protection laws.

Zillow did not immediately respond to a request for comment. Lead attorneys for the plaintiff had no immediate comment.

The proposed class includes all U.S. consumers who were referred to Zillow Home Loans by a Zillow-affiliated agent and obtained a mortgage loan from the company. The complaint seeks more than $5 million in damages, restitution and a court order to stop the alleged practices.

Zillow’s mortgage division originated more than $3 billion in loans in 2024, the lawsuit said.

Homebuyers accused Zillow in a separate lawsuit in September of deceptively using property listings to steer them to its network of affiliated agents. Zillow called the proposed class action a misrepresentation of how the company operates and said it will defend against it.

The case is Armstrong v. Zillow Group et al, U.S. District Court for the Western District of Washington, No. 2:25-cv-02226.

For plaintiff: Adam Levitt and Corban Rhodes of DiCello Levitt, and Jason Dennett and Rebecca Solomon of Tousley Brain Stephens

For defendant: No appearances yet

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(Reporting by Mike Scarcella)