Zillow faces a third amended complaint in the Taylor class-action lawsuit, with plaintiffs alleging violations of the Real Estate Settlement Procedures Act (RESPA). The narrowed suit now involves five plaintiffs and cites research indicating borrowers paid approximately $2,881 more per Zillow Home Loans (ZHL) mortgage compared to market rates.
The RESPA claims target Zillow's lending practices, suggesting the company steered borrowers toward higher-cost loans or failed to disclose material terms properly. RESPA prohibits kickbacks and steering in residential mortgage transactions. The $2,881 per-loan cost differential, if substantiated, could represent significant damages across ZHL's borrower base.
Zillow Home Loans, the company's lending arm, originated thousands of mortgages before the division shut down in 2022 amid operational challenges and market turbulence. The amended complaint reflects ongoing litigation over whether ZHL borrowers received fair pricing and transparent disclosures during the lending process.
For mortgage borrowers, this case underscores the importance of shopping rates across lenders and scrutinizing loan estimates before closing. Borrowers who took ZHL mortgages should review their closing documents to determine if they qualify for the class action, which could yield monetary recovery if the plaintiffs prevail.
The narrowing to five plaintiffs suggests the court may have dismissed some claims or parties, but the core allegations persist. Zillow has denied wrongdoing. The litigation reflects broader regulatory scrutiny of mortgage lenders around steering and pricing practices. Other lenders face similar RESPA suits, making this case relevant to the broader mortgage market. The outcome could influence how lenders structure loan offers and disclosures to borrowers moving forward.
For sellers listing properties, this litigation carries less direct impact than for borrowers. However, continued legal exposure for major lenders can